UNITED STATES SECURITIES AND EXCHANGE
COMMISSION WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 or
15(d) of THE SECURITIES AND EXCHANGE ACT OF 1934

For the fiscal
year ended December 31,
2013

Commission File
Number 1-9399

RESEARCH FRONTIERS INCORPORATED
(Exact name of registrant as specified in its charter)

DELAWARE

11-2103466

(State or
other jurisdiction of

(I.R.S.
Employer

incorporation
or organization)

Identification
No.)

240 CROSSWAYS
PARK DRIVE

WOODBURY, NEW
YORK

11797-2033

(Address of
principal executive offices)

(Zip
Code)

Registrants telephone number, including
area code (516) 364-1902

Securities
registered pursuant to Section 12(b) of the Act:

Name of
Exchange

Title of
Class

on Which
Registered

Common Stock,
$0.0001 Par Value

The NASDAQ
Stock

Market

Securities registered pursuant to
Section 12(g) of the Act: None

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes
[ ] No [X]

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.. Yes
[ ] No [X]

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files). Yes
[X] No [ ]

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes [ ] No [X]

The aggregate market value of the
voting and non-voting common equity held by non-affiliates of the registrant as
of June 28, 2013 (the last business day of the registrants most recently
completed second fiscal quarter), computed based on the closing sale price of
$3.98 was $73,886,802. In making this computation, all direct and indirect
shares known to be owned by directors and executive officers of the Company and
all direct and indirect shares known to be owned by other persons holding in
excess of 5% of the Companys common stock have been deemed held by affiliates
of the Company, and awards of restricted stock subject to vesting are assumed to
have been fully issued and outstanding. Nothing herein shall prejudice the right
of the Company or any such person to deny that any such director, executive
officer, or stockholder is an affiliate.

On March 10, 2014 the registrant had
23,109,665 shares of Common Stock outstanding.

1

PART I

ITEM 1.
BUSINESS

Forward-Looking Statements

Information included in this Annual
Report on Form 10-K may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are not statements of historical facts, but rather reflect our current
expectations concerning future events and results. We generally use the words
believes, expects, intends, plans, anticipates, likely, will and
similar expressions to identify forward-looking statements. Such forward-looking
statements, including those concerning our expectations, involve risks,
uncertainties and other factors, some of which are beyond our control, which may
cause our actual results, performance or achievements, or industry results, to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These risks,
uncertainties and factors include, but are not limited to, those factors set
forth in this Annual Report on Form 10-K under Item 1A.  Risk Factors below.
Except as required by applicable law, including the securities laws of the
United States, we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. You are cautioned not to unduly rely on such
forward-looking statements when evaluating the information presented in this
Annual Report on Form 10-K.

General

As used
herein, we, us, our, the Company or Research Frontiers means Research
Frontiers Incorporated unless otherwise indicated. We develop and license our
patented suspended particle device (SPD-Smart) light-control technology to
other companies that manufacture and market either the SPD-Smart chemical
emulsion, light-control film made from the chemical emulsion, lamination
services, electronics to power end-products incorporating the film, or the
end-products themselves such as smart windows, skylights and sunroofs.
Research Frontiers currently has over 40 companies that, in the aggregate, are
licensed to primarily serve four major SPD-Smart application areas (aerospace,
architectural, automotive and marine products) in every country of the world. In
addition, in 2013 we launched our VariGuard business unit that markets and sells
SPD-Smart products directly to customers for specialty uses such as the
protection of artwork and light-sensitive documents in museums and private
collections.

Research Frontiers was incorporated in New York in 1965 to continue early
work that Dr. Edwin Land, founder of Polaroid Corporation, and others had done
in the area of light-control beginning in the 1930s. Research Frontiers was
reincorporated in Delaware in 1989. Since 1965, Research Frontiers has actively
worked to develop and license its own SPD technology, which it protects using
patents, trade secrets and know-how. Although patent and trade secret protection
is not a guarantee of commercial success, Research Frontiers currently has
approximately 260 patents that have issued worldwide. In addition, the Company
has current patent applications in the US and other countries that if granted,
would add a significant number of additional patents to its portfolio. The
Company has and continues to devote significant resources to develop, license
and protect its intellectual property position.

2

SPD-Smart
products use microscopic light-absorbing nanoparticles that are typically
suspended in a film. These particles align when an electrical voltage is
applied, thus permitting light to pass through the film. Adjustment of the
voltage to the SPD film gives users the ability to quickly, precisely and
consistently regulate the amount of light, glare and heat passing through the
window, skylight, sunroof, window shade or other SPD-Smart end-product. This SPD
film can be incorporated between two layers of glass or plastic, or combinations
of both, to produce a laminate that has enhanced energy efficiency,
light-control and security performance properties.

Research Frontiers believes that the SPD industry is in the initial phase
of growth. SPD light-control technology may have commercial applicability in
many products where variable light-control is desired. Some existing product
applications for SPD-Smart glass or plastic include the following:

Some of our licensees consider the stage of development, product
introduction strategies and timetables, and other plans to be proprietary or
secret. Unless required to disclose such information, the Company may limit its disclosure of licensees activities until such licensees, or their customers, make their own public announcements of
planned or actual product launches.

Some of the early sales and uses of SPD technology were to low volume
commercial installations and some have involved concept and test installations
by licensees and their customers. Recent progress with regard to market
development and commercialization activity has been the result of focused and
active efforts by Research Frontiers and its key licensees who have invested in
product development and improvements, production facilities, increased
production capacity, durability, performance testing, quality control and
assurance, and marketing programs.

Beginning in late 2011, higher volume sales of SPD products commenced
with the launch by Daimler AG of the Magic Sky Control all glass roof option on
their Mercedes-Benz SLK, and SL vehicles starting in 2012. This roof is made
with Research Frontiers SPD-SmartGlass technology. In August 2013, the Company
announced that Magic Sky Control will be offered as an option on the new
Mercedes-Benz S-Class sedan, starting the second half of 2014. In addition, in
September 2013, the Company announced that Magic Sky Control will be offered as
an option on the new Mercedes-Benz S-Class Coupe, renamed from CL or CL-Class,
also starting the second half 2014.

Research Frontiers believes that with the normal progression of product
and manufacturing improvements, and as licensees become more experienced at the
lamination, fabrication and installation of SPD-Smart products for various
applications, the adoption rates for SPD-Smart products will grow and
accelerate, which we expect will increase the stream of royalty income for the
Company. Research Frontiers believes the largest and most predictable near and
intermediate term market for its technology will be automotive glass.

3

As part of
their marketing and branding programs, many of our licensees have developed
their own trademarks for SPD-Smart emulsion, film, and end-products and these
are listed in their respective press releases, product brochures, advertising
and other promotional materials. Research Frontiers uses the following
trademarks: SPD-Smart, SPD-SmartGlass, VaryFast, SPD-CleanTech, SPD Clean
Technology, SmartGlass, The View of the Future - Everywhere you Look, Powered
by SPD, Powered by SPD-CleanTech, Powered by SPD Clean Technology, SG
Enabled, SPD Green and Clean, SPD On-Board, Speed Matters, VariGuard and
Visit SmartGlass.com - to change your view of the world.

In each of the last three fiscal years the Company devoted substantially
all of its time to the development of one class of products, namely SPD-Smart
light-control technology, and therefore revenue analysis by class is not
provided herein. Information about our operations and those of our licensees is
included below and in our financial statements and notes thereto.

The Company does not believe that future sales will be seasonal in any
material respect. The Company does not currently directly manufacture products
on its own but rather depends on activities of its licensees and vendors. Due to
the nature of the Companys business operations and the fact that the Company is
not presently a manufacturer, there is no backlog of orders for the Companys
products.

The Company believes that compliance with federal, state and local
provisions which have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, will not have a material effect upon the capital expenditures,
earnings and competitive position of the Company. The Company has no material
capital expenditures for environmental control facilities planned for the
remainder of its current fiscal year or its next succeeding fiscal year.

Employees

On March 10, 2014 the Company had thirteen full-time employees, five of
whom are technical personnel, and the rest of whom perform legal, finance,
marketing, investor relations, and administrative functions. Of these employees,
three have obtained doctorates in chemistry, one has a masters degree in
chemistry, one has extensive industrial experience in electronics and electrical
engineering, and one has majored in physics. Three employees also have
additional postgraduate degrees in business administration. Also the Companys
suppliers and licensees have people on their teams with advanced degrees in a
number of areas relevant to the commercial development of products using the
Companys technology. The success of the Company is dependent upon, among other
things, the services of its senior management, the loss of which could have a
material adverse effect upon the prospects of the Company.

Smart Glass Industry
Trends

There are favorable converging global trends in the major near-term
markets for smart glass and SPD-Smart products. The potential for smart glass
products is significant and is expected to attain economies of scale with
increasing high volume production. This increased production is also expected to
bring down end product costs and expand market opportunities.

4

In both public and private sectors
across the world, there are substantial efforts targeted toward the promotion
and use of energy efficient smart glass materials, including those used in
automobiles, windows and other architectural glazings, aircraft and boats.
Products using SPD-Smart technology continue to be exhibited at trade shows,
conferences, and industry events, with such products not only being exhibited by
our licensees but also by their customers and by OEMs. While there can be no
assurance that these trends will continue, to the extent that they do continue,
each is expected to have a beneficial effect on future interest in SPD-Smart
technology.

Automotive Market:

In the
automotive industry, global trends include the introduction of larger sunroofs
and panoramic roof panels in transportation vehicles, and a higher percentage of
these vehicles having a sunroof or using more glass in the roof.

SPD-SmartGlass has also been shown in armored automotive glass
applications, recreational vehicles, and a new market is also beginning to
develop for personalized custom conversions of automobiles for owners who wish
to express themselves through the design of the cars they own and/or drive.

Aircraft Market:

In the aircraft industry there is a trend towards larger windows with
more passenger control and functionality. In the transport category (primarily
large commercial passenger aircraft) segment, the world's two largest aircraft
manufacturers are both promoting the size of the windows in new aircraft
platforms either already being delivered (e.g. Boeing 787) or in preproduction
(e.g. Airbus A350). In the general aviation category (primarily private or
chartered smaller aircraft) this trend is true as well. For example Gulfstream
is promoting the size of the windows on their G650 platform, and Bombardier
highlights the size of the cabin window on the upcoming Global 7000 and 8000
platforms. Several OEMs either already offer, or have announced their interest
to include, electronic smart window shades in their aircraft  including Boeing,
Airbus, Bombardier, Embraer, Beechcraft, HondaJet, Eurocopter, Dassault and
Nextant.

Electronic aircraft window shades may use SPD technology, or may use
other smart window technologies such as liquid crystal or electrochromic
technology. A window system using electrochromic technology was introduced in
the Boeing 787. There have been concerns raised that this aircraft's electronic
dimmable windows are not dark enough for long haul flights, transmits too much
heat into the cabin, and have a switching speed that is too slow.

The Company believes its SPD technology offers important performance
advantages over other technologies including faster, more uniform response time,
greater light-blockage, maximum heat-rejection when the aircraft is parked on
the ramp, an automated dimming system to continuously maintain a constant level
of light in the cabin in real-time, and weight-savings. To date, SPD technology
is also the only commercially available light-control smart window technology
known to have passed the stringent safety and durability tests required by the
aviation industry and to have received a Supplemental Type Certificate (STC)
from the Federal Aviation Administration. Today SPD-Smart window shades are
flying in 31 models of various aircraft including those used in commercial
aviation, general aviation and military aviation. Three leading companies
manufacturing electromechanical pleated window shades have announced new
products that incorporate SPD dimmable windows into their designs.

5

Architectural Market:

The
architectural community is actively increasing the use of daylight harvesting,
green building technologies and building automation systems to more effectively
capture and control natural light as part of energy reduction strategies to
offset cooling/heating costs and electricity used by artificial lighting. In
addition to design, aesthetic and other benefits, this, the expanded use of
glass also supports a growing body of research which finds that the presence of
and control over incoming natural light improves an individuals well-being and
productivity. Products using SPD-Smart light-control technology  sunroofs,
windows, skylights, partitions and others  can play an important role in
supporting these converging global trends.

For architectural applications, various market forces and the distinctive
features of SPD-SmartGlass are having a positive influence on interest for
SPD-Smart products. Many architects are specifying more glass in their designs
to satisfy building occupants desire for greater connectedness with the outside
environment. In addition, there is increasing interest in improving energy
efficiency in both commercial and residential buildings. Various studies
indicate that buildings in the United States and Europe now account for an
estimated 39-40% of total energy use and upwards of 70% or more of electricity
consumption. Many architects and building owners are striving for sustainable,
"green" buildings that are highly energy-efficient, reduce environmental impact,
and improve occupant health and well-being. In addition, the design community is
increasingly interested in advanced daylighting systems in buildings that lower
electrical lighting usage and reduce heating and cooling loads. Because of this,
the ability to control light, glare and heat in these building applications is
very important and advanced solutions often are needed to optimize operating
efficiencies. SPD-Smart architectural products instantly and precisely provide
shading, glare control and heat management solutions for offices and homes,
especially when these products are available for new construction, replacement
and retrofit projects. These products include insulated glass units,
single-panel retrofits, unusually shaped glazings, and products with advanced
fabrications such as those with ballistic- and blast-resistant capabilities.

In November 2012, MarketsandMarkets issued a global smart window study
that projects 20.3 percent annual growth for this market from 2012 through 2017.
The global smart glass market is expected to reach $3.83 billion by 2017.

Marine Market:

In the marine application, where light-control needs are especially
important, many yacht manufacturers currently employ less than ideal glazing
solutions as they try to satisfy various shading and solar control objectives.
For example, some report having to use as many as five different types of glass
in a typical yacht to satisfy diverse glazing needs. SPD-Smart marine products
can reduce the number of different types of glass used in these yachts because
of its increased functionality, superior performance and versatility. SPD-Smart
marine products provide an innovation that allows these operators to manage
incoming light, glare and heat while achieving privacy or maintaining ones view
as desired.

Historical Background and Recent
Developments

SPD-Smart Film Production:

An important material used in SPD-Smart end-products is SPD light-control
film that varies the tint of glass or plastic. In early 2007, our licensee
Hitachi Chemical began producing their initial SPD-Smart light-control film on
their first factory line. During the second half of 2009, Hitachi Chemical
announced that they had begun mass production on their new, larger capacity
production line and expanded their annual production capacity to 400,000 square
meters (over 4.3 million square feet).

6

Hitachi
Chemicals production line is dedicated exclusively to the production of
SPD-Smart film. In July 2009, Hitachi Chemical launched its website dedicated to
its SPD-Smart light control film and during 2009, Hitachi Chemical outlined in
its press releases and public presentations that it plans to "accelerate the use
of SPD film, which holds significant potential for growth" and noted that "SPD
film is positioned as one of the key emerging products promoted by Hitachi
Chemical to become a future leading product for the company."

Customers for Hitachi Chemical's SPD-Smart film are end-product licensees
of Research Frontiers. These licensees receive the film, laminate it between
glass or plastic substrates, and then fabricate end-products which are sold into
various industries. Most end-product licensees pay Research Frontiers a royalty
on the sale of these end-products that typically range from 10-15%.

In 2010, Hitachi Chemical expanded its SPD film product portfolio by
initiating commercial production of a lighter version of its film. Both the
SPD dark and light films provide very high ranges of visible light
transmission. SPD dark film has a range of approximately 0.5% to 55.0%, and
SPD light film has a range of approximately 2% to 65%. This leads to contrast
ratios (the ratio of clear to dark light transmission) of up to 110:1. The
commercialization of both dark and light versions of SPD-film provides
greater design and performance options for various end-product
applications.

In February 2012, Research Frontiers filed a patent application relating
to the production of SPD-films with even higher light and dark transmission
states than currently are available commercially.

Two other companies are currently developing SPD-Smart light-control film
under license from Research Frontiers using SPD-Smart emulsion. These two
companies are licensed to sell SPD-Smart light-control film to other licensees
of Research Frontiers. Neither of these companies has yet announced commercial
SPD film products for sale.

In February 2010, iGlass acquired a license from Research Frontiers
granting it the right to manufacture and sell SPD-Smart architectural
end-products in Australia, New Zealand and South Africa. The license also grants
ID Research Pty Ltd the worldwide right to manufacture and sell SPD emulsion and
film to end-product licensees of Research Frontiers. The license follows a $1.5
million grant to ID Research Pty Ltd from the Government of Victoria's Science
Agenda (VSA) Investment Fund for "Electro Responsive Material Coatings for
Switchable Automotive Tinted Glass." The proceeds of this investment are to
upgrade and modify the companys factory to produce SPD light-control film.

SPD-Smart Automotive Products:

Research Frontiers and its licensees are currently working with multiple
automotive manufacturers to introduce SPD-Smart windows, sunroofs and roof
systems on both concept and production vehicles. Research Frontiers end-product
licensees in this sector include: American Glass Products, Asahi Glass, BOS
Automotive, Custom Glass, Daimler AG, DuPont, GKN Aerospace Transparency
Systems, Isoclima, Pilkington Glass, Pittsburgh Glass Works, Saint-Gobain Vision Systems, Tint-It JSC and
Advnanotech. The Companys automotive glass licensees account for the majority
of all glass produced for the automotive market throughout the world.

7

Automotive OEMs

In 2011,
Daimler AG began using SPD-SmartGlass technology in its Magic Sky Control
panoramic glass roof as an option on its new Mercedes-Benz 2012 SLK. In 2012,
Daimler AG also began offering its Magic Sky Control panoramic glass roof as an
option on its new Mercedes-Benz 2013 SL. These SPD products allow drivers and
passengers to change the tint of the car roof from dark to clear quickly with a
touch of a button. The SLK and SL are the first large-scale series production
vehicles to offer SPD-SmartGlass. The Research Frontiers licensees involved with
the production of the Magic Sky Control roof for the SLK and SL include Hitachi
Chemical, which manufactures the SPD-Smart light-control film in Japan.
Automotive glass companies Nippon Sheet Glass in Japan and Pilkington in the UK
and Germany then process and laminate Hitachis SPD film into the glass for the
Magic Sky Control roof.

In August 2013, the Company announced that Magic Sky Control will be
offered as an option on the new Mercedes-Benz S-Class sedan, starting the second
half of 2014. In addition, in September 2013, the company announced that Magic
Sky Control will be offered as an option on the new Mercedes-Benz S-Class
Coupe, renamed from CL or CL-Class, also starting the second half 2014. The
all-new Mercedes-Benz S-Class is the third large-scale serial production vehicle
to offer Magic Sky Control using SPD-Smart technology. The S-Class will offer
the largest panoramic Magic Sky Control roof ever put into serial production.
The surface area of the panoramic roof using SPD-SmartGlass technology on the
S-Class is approximately three times the size of the roof glass used on the
current SLK and SL roadster, and third-party market forecasters estimate that
the total vehicle production volumes for the S-Class will be higher than the SLK
and SL roadsters combined. Research Frontiers believes that the addition of this
new car model is also significant since it applies our SPD-Smart light-control
technology to the broader class of vehicles by moving beyond roadsters to
passenger sedans. Historically, since its debut over 40 years ago, the S-Class
represents the premier platform to introduce new technologies to the customer,
which in many cases expand to the other less expensive model lines within the
Mercedes-Benz brand.

Some automakers have incorporated SPD-SmartGlass in concept vehicles,
with some of these concept vehicles being exhibited at major auto shows:

Mercedes-Benz debuted at the Geneva International Motor Show
its public evaluation of the Limited Edition Viano Pearl. This vehicle
displays the capabilities and conceptual use of SPD-SmartGlass on the side
glass of vehicles from Mercedes-Benz.

December 2011:

Toyota debuted
its FS Hybrid Concept at the 2011 Tokyo Motor Show in Tokyo, Japan. The FS
Hybrid Concept demonstrated the use of SPD-Smart technology in side glass.

8

Automotive
Aftermarket:

While the
highest volume market for which SPD-Smart technology is being developed is new
car production by the worlds automakers, the aftermarket upgrade market also
presents near-term opportunities in the automotive market. Research Frontiers
licensee American Glass Products (AGP) is offering its Vario Plus Sky
SPD-SmartGlass to the automotive aftermarket. In March of 2013 Research
Frontiers announced that it had added two new licensees, Tint-It JSC and
Advnanotech, both of whom are targeting the automotive aftermarket in Russia.

Vision Systems announced in January 2012 that Notin, manufacturer of
motorhomes and campers, has selected Visions Systems Nuance brand of
SPD-SmartGlass for the skylight of Notin's Angara luxury motorhome. The
SPD-Smart skylight is standard equipment on the Angara. In October 2013 at
Busworld 2013, Vision Systems showcased a new sun visor using SPD-Smart
light-control film technology and a light sensor to automatically and
dynamically adjust the sun visor to deal with changing light and glare
conditions. Vision Systems indicated that they have been working for almost two
years with a major automotive OEM to test the ease of installation, reliability,
design and performance of their new sun visor in real world conditions. They
further indicated that customer reaction regarding the effectiveness and ease of
use of this product has been excellent. The fact that this feature can be
installed in the aftermarket should bring these benefits to a wider range of
drivers.

Automotive Armored Glass
Market:

Within the automotive market, a potentially additional sector is the
armored glass market. Armored glass (sometimes referred to as transparent
armor and bullet-resistant glass) encompasses the military, non-military
government, and civilian markets. In addition, SPD-Smart technology in this
market not only provides the benefits of light-control and UV blockage, it also
enhances security by introducing darker tints and privacy. A number of the
Companys licensees including American Glass Products, GKN, Isoclima and
Pittsburgh Glass Works are recognized industry leaders in the armored glass
market.

SPD-Smart Aircraft Products:

Some aircraft manufacturers have incorporated SPD-Smart cabin windows in
mockups, with some of these mockups being exhibited at major aviation shows:

November 2011:

Bombardier
Aerospace featured SPD-Smart aircraft windows in their CSeries aircraft cabin
mock-up at the 2011 Dubai Airshow, equipping the business class windows in its mock-up with SPD-Smart
aerospace windows.

9

October 2012:

Honda Aircraft
Company featured HondaJet SPD-Smart cabin windows at the 2012 National
Business Aviation Association (NBAA) Annual Meeting & Convention. The
HondaJets cabin windows use SPD technology as standard equipment and is
currently expected to go into production in late 2014.

May 2013:

Eurocopter featured SPD-Smart windows, and SPD-Smart cabin
partitions, in the mock-up of their EC175 helicopter. The mock-up was unveiled
at EBACE 2013 in Geneva, Switzerland.

October 2013:

Dassault announced their Falcon 5X at the 2013 NBAA show in
Las Vegas. In an aviation industry first, an SPD-Smart skylight was featured
on the mock-up. The Falcon 5X will use SPD technology as standard equipment,
and use of a skylight on an aircraft is an industry first.

In July 2012,
Research Frontiers marked the opening of the 2012 Farnborough International
Airshow by announcing the availability of new SPD-Smart electronically dimmable
aircraft windows with an unprecedented combination of instant switching speed,
and light-, noise- and heat-blocking capabilities. The latest generation
provides the aircraft industry's only complete solution to managing in real-time
the environmental challenges that outside conditions inflict on the cabin
interior and passengers including light, glare, heat and noise.

Level of
darkness:

Solar
radiation onboard aircraft is extreme, and requires a dimmable window that
creates an environment dark enough for passengers to sleep, even during daylight
hours. Research Frontiers licensees now offer SPD-Smart windows that can be set
to block over 99.96% of incoming light  achieving cabin blackout conditions
whenever desired  to meet the needs of OEMs and their customers.

Switching
speed:

Whenever a
passenger wants relief from glare, SPD-Smart aircraft windows offer immediate
response. Due to instant switching, an infinite number of light-transmission
states can be selected by the passenger or flight crew, from clear to blackout,
and any level of view-preserving tint in between.

Heat-blocking:

Aircraft
cabins can become hot when the aircraft is parked because of solar heat
streaming through windows. The result is an uncomfortably warm cabin upon
boarding or the need to use jet fuel or auxiliary power units before boarding to
cool down the cabin. SPD-Smart aircraft windows automatically switch to their
maximum heat-blocking state, even when the aircraft is parked unpowered, and the
cabin remains cool.

10

Other
performance benefits:

Additional
challenges stated by OEMs and their customers that have been successfully met by
SPD-Smart dimmable aircraft windows include:

Noise-blocking: the ability to reduce the amount of noise transmitted
through windows

Weight-reduction: the ability to
fabricate dimmable windows using lightweight plastics

FAA certification: the ability to
demonstrate full compliance with all FAA requirements

Aircraft Window Licensee -
InspecTech Aero Service Inc.

Research
Frontiers' licensee InspecTech Aero Service Inc. markets its iShade and eShade
brands of SPD-Smart windows to both the OEM new production segment and
aftermarket segment of the aviation industry. Building on previously announced
milestones including the selection by Hawker Beechcraft Corporation of
InspecTech smart window shades for aftermarket installation on King Air
aircraft, and receiving a Supplemental Type Certificate (STC) for all models of
King Air aircraft by the FAA, InspecTech and its strategic partners are working
with a growing number of aircraft manufacturers and their customers and are
selling SPD-Smart dimmable windows for fixed wing aircraft and helicopters.
InspecTechs SPD-Smart products have been installed on 31 models of helicopters
and commercial, corporate, and military aircraft.

InspecTechs SPD-Smart aircraft windows are now available for any
aircraft as an aftermarket installation worldwide, and for new production
aircraft. In the transport category of the industry, InspecTechs SPD-Smart
products have been installed in selected areas on all Airbus A380 aircraft
delivered by Airbus to Qantas Airlines to date, making SPD-Smart window shades
the first and only instantly dimmable window shade flying on commercial
airlines.

In 2013, InspecTech marked the 12-year anniversary of the worlds first
dimmable aircraft windows. SPD-Smart iShades installed in 2001 are still in
service, validating the superior durability of iShades over any other shading
system. InspecTechs SPD-Smart product line has evolved as a result of working
closely with aircraft OEMs, private jet owners, and the changing certification
requirements of the FAA. Recent improvements include:

April
2011:

InspecTech announced a new model of its SPD-Smart iShade window, branded iShade
iQ. This model, in addition to the light, glare and heat control, also reduces
noise levels in the cabin.

InspecTech announced enhancements to its electronics
architecture used to control iShades to enable the SPD-Smart windows to switch
to their clearest state in the event of a power loss  that was a request made
by certain OEMs. InspecTechs iShades now offer the best of both worlds -
when unpowered on the ramp, the windows automatically switch to their darkest,
maximum heat-rejecting state, and when in the air, they instantly switch to
the clear state in the event of a loss of power.

Throughout
2013, InspecTechs strategic partner MSA Aircraft
Products showcased SPD-Smart shades at industry
trade shows and events. MSAs products combine
InspecTechs SPD-Smart iShade dimmable window with a pleated shade. The
integration of InspecTechs iShade greatly enhances the flexibility and
light-control capability now available to MSA Aircraft Products customers.
MSAs SPD-Smart products offer a combination of performance benefits in a single
system  view preservation, variable shading, complete privacy, and a broader
set of interior design options with the addition of a pleated shade. This
integration highlights the creative potential and adaptability of SPD
technology.

In April 2013, it was announced that InspecTech and premier aircraft
shade manufacturer Aerospace Technologies Group (ATG) had joined forces as
strategic partners. At the 2013 Aircraft Interiors Expo in April, they announced
a new product, branded Panacea, combining InspecTechs SPD-Smart dimmable window
with ATGs pleated shade technology. In June 2013, ATG announced it was
expanding its product line, branded Tranquility, featuring InspecTechs
SPD-Smart dimmable window without a pleated shade component. ATG now offers
customers a full range of EDW options: Tranquility brand (standalone SPD), with
a clean, sleek look and their Panacea brand (incorporates an elegant fabric look
into a combination electromechanical and SPD-Smart shade. ATG featured their
SPD-Smart products at industry trade shows and events beginning in April 2013.

At the end of 2013, InspecTechs sales of its iShade and eShade brands of
SPD-Smart dimmable windows had extended to installation on 31 different aircraft
models, and its mature SPD-Smart dimmable windows had been on in-service
aircraft for eleven years.

12

Aircraft Window Licensee - Vision
Systems

In November 2011, licensee Vision Systems exhibited its Nuance and Noctis
brands of SPD-Smart aircraft cabin windows at the Dubai Airshow in Dubai, United
Arab Emirates. Nuance and Noctis SPD-Smart aerospace windows offer instant and
precise light-control at every level which provides OEMs and private aircraft
owners a solar protection solution that enhances flying comfort and supports
fuel efficiency. These electronically dimmable aircraft and helicopter window
shades and cabin dividers are impact-resistant, completely silent, available in
flat and curved surfaces, and can be controlled by the cabin management system
or by passengers. Vision Systems Noctis SPD-Smart product line offers enhanced
blackout solar protection and complete privacy. Also at the November 2011 Dubai
Airshow, Vision Systems announced that Bombardier Aerospace was featuring Vision
Systems SPD-Smart aircraft windows in Bombardiers CSeries aircraft cabin
mock-up. Bombardier equipped the business class windows in its mock-up with
Vision Systems SPD-Smart Noctis aerospace windows. Developed for the 100- to
149-seat market segment, the CSeries family of aircraft is Bombardiers all new
mainline transport solution.

In March 2012, Vision Systems announced that the company has invested
over $750,000 to expand its existing factory in France to add a production
facility dedicated to the manufacture of its SPD-Smart Nuance and Noctis
aerospace and transportation windows and cabin dividers.

In April 2013, Vision Systems debuted its new SPD-Smart window with
integrated electronics and controls directly on the window at the 2013 Hamburg
Air Show. Developed with strategic partner Vaupell, a world leader in the
production of aircraft interior subassemblies for commercial aerospace
applications, it became the first dimmable window with integrated electronics
and control panel directly on the aesthetically attractive window
reveal.

In June 2013 at the Paris Air Show, Vision Systems announced it will open
its first-ever U.S. SPD-SmartGlass factory, investing nearly $1.2 million in
capital expenditures to serve customers with strong U.S. operations. The new
factory was highlighted by Florida Governor Rick Scott and Vision Systems
President and CEO Carl Putman, with Research Frontiers President and CEO Joseph
M. Harary and others in attendance for this special announcement. This
announcement of a further expansion to the United States indicates an
acceleration of existing and projected business in North and South America where
major aircraft OEMs and customers of Vision Systems are located, including
HondaJet and Gulfstream.

In October 2013, at the 2013 AIX Americas show, Vision Systems strategic
partner Vaupell announced they are offering the industry a complete SPD-Smart
light-control window system  Vision Systems SPD-Smart Noctis window and
control system, integrated with Vaupells window assembly. This product offering
was showcased at Vaupells AIX Americas booth. Vision Systems and Vaupell
entered into a strategic partnership to develop and offer SPD-Smart Noctis and
Nuance windows to OEMs, including Vaupells longstanding customer Boeing.

In October 2013, at the 2013 NBAA, Vision Systems unveiled Energia  the
worlds first self-powered dimmable window for aircraft cabins. Energia adds the
many practical, technical, and financial benefits of solar power to the instant
switching speed, wide range of light transmission, and relief from light, glare
and heat that SPD-Smart aircraft windows already provide. Energia operates
without using the aircrafts electrical system because it integrates a
transparent photovoltaic layer that is capable of producing its own energy 
from the sun, or from artificial light sources. Energia facilitates the
installation of dimmable windows on new production and aftermarket aircraft. It
is completely independent of the cabins wiring, and no modifications to the
aircrafts existing electrical system are required. Energia was developed in
collaboration with Sunpartner Technologies, Vision Systems partner and the
inventor and manufacturer of the transparent photovoltaic panel.

13

Aircraft Window Licensee - GKN
Aerospace Transparency Systems

In January
2011, Research Frontiers and GKN Aerospace Transparency Systems publicly
announced the expansion of the scope of the former license agreement to include
the sale of SPD-Smart windows, window shades, interior partitions, cabin
dividers and other products for aircraft. The earlier license agreement with GKN
focused on SPD-Smart products for armored transportation applications.
GKN Aerospace is the world-leading supplier of
cockpit transparencies and passenger cabin windows.

In October 2013, in a press release at the 2013 NBAA in Las Vegas, GKN
stated: In addition to the Global 7000/8000, the aircraft transparencies
operation equips the Beechcraft KingAir, the Lear 35/45 and 60  and the
complete Embraer aircraft family. The companys latest passenger windows are the
largest and most effective on the market and GKN Aerospace is developing new
dimmable cabin management technology that will include full cabin blackout 
providing passengers with new levels of comfort and environmental control during
their journey.

Aircraft Window Licensee -
SmartGlass International Ltd.

In 2010, Research Frontiers and SmartGlass International Ltd. announced
an agreement to expand the scope of SmartGlass Internationals license. Under
this agreement, SmartGlass International is authorized to manufacture and offer
SPD-Smart products, including aerospace windows, worldwide. Prior to this
agreement, SmartGlass International was licensed to offer SPD-Smart
architectural products worldwide outside of North America.

In 2014 the Company was advised that Smart Glass International is being
liquidated. Sales by SmartGlass International in this market have been
negligible and we do not expect their liquidation to have a material impact on
Research Frontiers or its revenues going forward.

Aircraft Window Licensee - Isoclima,
S.p.A.

In March 2012, at the 2012 Aircraft Interiors Expo in Hamburg, Germany,
Isoclima S.p.A. announced that Isoclimas CromaLite brand of SPD-Smart aerospace
windows made their world premier. CromaLite is Isoclimas SPD-Smart solar
control glazing product and enables users to efficiently control the transmitted
solar radiation in both the visible and the solar range. Dr. Alberto Bertolini,
Executive Director of Isoclima, commented: Our CromaLite brand of SPD-Smart
window offers many valuable light-control benefits: instant shading, glare
control, UV rejection, the desire for passenger comfort, and keeping aircraft
cool when they are on the ground. We are very excited by the reactions we have
received from OEMs and cabin designers who are here at the Aircraft Interiors
Expo, and are excited about our growing portfolio of SPD-Smart CromaLite
solutions for the transportation and architectural markets.

SPD-Smart Architectural Products:

Research Frontiers and its licensees are currently working with multiple
architectural customers to introduce SPD-Smart products including windows,
skylights, partitions and doors. The architectural markets for these products
are highly fragmented and in general have a high sensitivity to price. In the
near term, the Company expects SPD-SmartGlass products primarily will be
commercialized in specialty applications and/or sectors that value its
distinctive performance attributes including fast switching speed regardless of
window size, a very wide range of visible light transmission, infinite
light-control between its dark and clear states, and availability in unusual
shapes and sizes. Research Frontiers end-product licensees in this sector
include: Advnanotech (ADV), American Glass Products (AGP), Asahi Glass, Cricursa
Cristales Curvados, ID Research Pty Ltd. (i-Glass), Innovative Glass, LTI
SmartGlass, Prelco, Isoclima, Traco (a business unit of Alcoa), Mecanica de
Vidros Industria E Comercio (MDV), and Tint-It JSC.

14

SPD-Smart
windows, skylights, doors and partitions offer various benefits in architectural
applications. During 2009, independent tests were conducted by DSET
Laboratories, a division of Atlas Material Testing Technology, in accordance
with ASTM and ASHRAE testing and calculation protocols. These test results
demonstrate that SPD-Smart windows have excellent solar heat rejection and
control capabilities. In January 2011 a new study published by the Department of
Engineering at the University of Cambridge concluded that SPD-Smart
light-control windows are exceptionally energy efficient, reducing solar heat
gain by as much as 90%. The Cambridge study indicated that the real-world
testing "confirms theoretical predictions that SPD glass holds great energy
saving potential and is a technology that can really help to reduce energy
wastage of glass facades." In addition to SPD-Smart technology, the Cambridge
study discussed alternative dynamic glazing technologies that could be used in
windows (e.g. electrochromics) and reported that SPD-Smart technology did not
have the disadvantages that limited the potential of these alternative
technologies. For example, the study cited that an electrochromic window that is
2.4 square meters can take up to 30 minutes to change from clear to dark.

In November 2011, Research Frontiers licensee Innovative Glass
Corporation was awarded two 2010 Crystal Achievement Awards for their smart
window product line using our SPD-Smart light-control technology. In October
2010, their SPD-SmartGlass product was awarded WFXs (Worship Facilities
Conference & Expo) New Product award for Best Building System Material
Product/Window. Innovative Glass has completed or is working on a variety of
SPD-SmartGlass projects in the commercial, residential and institutional
markets. JSC, Innovative Glass exhibited its SPD-SmartGlass architectural
products at Glass Expo Northeast in Hauppauge, New York. Glass Expo Northeast is
the regions largest conference and trade show dedicated to the architectural
glass and metal industry.

Research Frontiers licensee SmartGlass International has announced
completion of several high visibility SPD-SmartGlass installations. During
February 2012, the company announced installation of SPD-SmartGlass at CERN, the
European Organization for Nuclear Research, which is one of the worlds largest
and most respected centers for scientific research. SmartGlass International
installed SPD-SmartGlass in CERNs Globe of Science and Innovation that will
house a permanent exhibition and is intended to serve as a venue for a wide
range of activities, conferences and other events, In February 2011, SmartGlass
International announced it supplied retrofit SPD-SmartGlass to five London
television studios of the Associated Press. The SPD-SmartGlass used in these
projects harvests daylight when it's needed, improves occupant comfort by
providing controllable solar shading during peak light conditions, and preserves
views. Just prior to this installation, it was announced that SmartGlass
International installed retrofit SPD-SmartGlass panels at the set of "Daybreak,"
the breakfast anchor program from ITV, one of the UK's largest commercial
television networks.

15

In November
2012, licensee LTI Smart Glass exhibited SPD-SmartGlass at the 2012
ArchitectureBoston Expo (formerly known as Build Boston) architectural trade
event. Known as a pioneer in the processing and laminating of electrified films,
the LTI Smart Glass product line includes high-performance SPD-Smart ballistic-
and blast-rated glazings, in addition to conventional SPD-Smart windows, doors,
skylights and partitions.

In March of 2013 Research Frontiers announced that it had added two new
licensees, Tint-It JSC and Advnanotech, both of whom are targeting the
architectural market (in addition to the automotive aftermarket discussed
previously) in Russia.

In November of 2013 Research Frontiers announced that it had a new
licensee, MDV, who is targeting the architectural market in Brazil.

SPD-Smart Marine Products:

Research Frontiers and its licensees are currently working with marine
customers to introduce SPD-Smart products including windows, doors and
partitions. In December 2010, Diamond Sea Glaze Manufacturing Ltd. acquired a
license from Research Frontiers granting it the right to manufacture and sell
SPD-Smart marine end-products worldwide. When our patented SPD-Smart
light-control technology is used in yacht windows and other products, users can
quickly and precisely control and tune the amount of light, glare and heat
coming through their windows, while preserving their view. Diamond Sea-Glaze
Manufacturing commenced marketing activities for products using SPD technology
during the second quarter of 2011.

In October 2011, Cheoy Lee Shipyards unveiled the Alpha, its most
advanced production yacht, which is fully-equipped with the latest yacht design
features including SPD-SmartGlass supplied by Research Frontiers licensee
Diamond Sea Glaze. The Alpha has approximately 150 square feet of SPD-SmartGlass
at various places throughout the vessel and it is the first large-scale
production yacht to make such extensive use of SPD-SmartGlass.

In October 2012, Cheoy Lee Shipyards exhibited two yachts  the Alpha 76
Express and the Alpha 76 Flybridge  at the 2012 Fort Lauderdale International
Boat Show. These production yachts featured Research Frontiers licensee Diamond
Sea Glazes DiamondSmart brand of SPD-SmartGlass. In November 2012, licensee
Isoclima exhibited its VebLite brand of SPD-SmartGlass for marine applications
at the Marine Equipment Trade (METS) Show 2012 in The Netherlands. VebLite is
Isoclimas SPD-Smart solar control and privacy glazing product that functions
like a venetian blind. It has multiple segments that provide instantly
customizable shading fully controlled by the passenger and can be operated
individually to create the effect of a shade being raised or lowered or moved to
the side. This precisely controls where incoming heat and glare enter a yacht or
boat through a window or rooflite, and also controls privacy levels.

In addition to exhibiting its SPD-Smart marine products at METS 2012,
licensee Vision Systems SPD-Smart Nuance dimmable marine window was named the
category winner in the prestigious METS 2012 Design Award METS (DAME)
competition for interior equipment, furnishing, materials and electrical
fittings used in cabins. DAME is considered the worlds most prestigious design
competition for new marine equipment and accessories. In METS news release
about the DAME award, it was noted The Jury felt that Nuance is a major
innovation that will benefit designers and owners greatly - with comparatively
little increase in cost.

16

In February
2013, licensee Isoclima demonstrated its VebLite brand of SPD-SmartGlass for
marine applications at SEATEC 2013 in Italy. SEATEC 2013 is a leading
international exhibition of technology and design for boats, megayachts and
ships.

In November 2013, Hatteras Yachts unveiled their new flagship motor
yacht, the 100 Raised Pilothouse with dual SPD-SmartGlass skylights in the
galley as standard equipment at the 2013 Fort Lauderdale Boat Show.

VariGuard Business Unit:

In May of 2013 Research Frontiers announced the formation of its
VariGuard business unit. This business unit allows the Company to directly
address market opportunities for SPD technology outside the scope of its current
license agreements or the focus of its licensees. Variguard is a developmental activity for the Company and its revenues
are currently immaterial relative the Companys licensing activities.

The VariGuard business unit markets and sells SPD-Smart products directly
to customers for specialty uses such as the protection of artwork and
light-sensitive documents in museums and private collections. The business uses
an optimized fabrication designed specifically for its exhibition panels. The
production of these panels is outsourced to current licensees that have
experience producing SPD laminates.

Excessive light-exposure is a leading cause of irreversible damage to
many precious objects, particularly works on paper, textiles and watercolor.
Presently, no display system is able to provide these artifacts with any
protection against visible light damage. VariGuard provides the world's first
and only display panels that limit an artifact's light-exposure only to when the
artifact is being viewed. This provides unequalled protection for
light-sensitive artifacts by substantially reducing an artifact's overall
lux-hour exposure when compared to conventional display panels.

In May 2013, VariGuard featured its panels in several framing
applications at Museum Expo 2013 at the Baltimore Convention Center in
Baltimore, MD.

In January 2014, the VariGuard business unit announced that Omega
Moulding will distribute its patented light control SmartGlass products for
frames and display cases in the United States and Canada. That month Omega
Moulding showcased the benefits of VariGuard SmartGlass products at the 15th
Annual West Coast Art and Frame Expo and National Conference in Las Vegas, NV.

More information about VariGuard can be found on its independent website
at www.VariGuard.com.

Marketing Activities and Licensee
Support

In addition to supporting the efforts of its licensees, the Company also
recognizes the need to develop the SPD industry as a whole. As such, the Company
continues to plan and execute complementary programs that build awareness and
interest in smart glass generally and demand for SPD-Smart products
specifically. In 2013, these programs include presentations at various general
industry conferences, participation in panel presentations and discussions
hosted by academia, development of trade association educational materials, and
presentations to architects, designers, and other influential specifiers
including a smart window conference sponsored by Israel Berger Associates. In
2014, the Company expects to participate in additional conferences and events
including a keynote presentation at the April 2014 IDTechEx Energy Harvesting
& Storage Conference in Berlin, Germany.

17

The Companys
market development department has a number of other initiatives in place. To
help guide and prioritize its technical and marketing investments, the Company
periodically retains outside strategic marketing and other consultants to help
generate increased short- and medium-term market penetrations for each of the
major markets for the Companys light-control technology, and to provide support
and guidance to the Companys licensees worldwide.

The Company has emerged as a leading resource for market research
information on the subject of smart glass. Research Frontiers lectures and
presents at industry conferences in areas of energy efficiency, daylight
harvesting and sustainability. The Company has published independent test data
about SPD-SmartGlass, shared the results of its research studies and test data
with industry and the media, posted various reference materials to the Companys
website for global dissemination, and published presentations, data and bylined
articles.

Research Frontiers maintains an active role with various
standards-setting organizations, including ASTM International which has an
active committee developing standards for smartglass.

In addition to Research Frontiers providing overarching support of
licensees sales efforts by developing the SPD industry as a whole, leveraging
its prominence as a leading resource on the topic of smart glass, and
maintaining an active role with standards organizations, Research Frontiers also
supports licensees marketing and sales efforts directly. Activities include
advising and assisting with branding strategies and advertising campaigns,
website development and other marketing materials, joint presentations to
prospective customers, and additional support. As a focal point of interest in
smart glass, resulting in many consumer and business inquiries, Research
Frontiers has an active referral program to generate customer leads for its
licensees.

As part of this mission to develop the industry and to support our
licensees acquiring SPD projects, in March of 2009 Research Frontiers announced
the completion of the SPD-SmartGlass Design Center. Research Frontiers and its
licensees have begun to host a series of events at this new facility which has
drawn visitors from throughout the world. This Center is also configured as an
interactive and energy-efficient "smart" executive office and conference room,
and is located at the Company's corporate headquarters in Woodbury, New York.
The SPD-SmartGlass Design Center features leading-edge SPD-Smart windows of
different sizes (some floor-to-ceiling) and framing materials. It has a
multi-functional electronic controller system for manual, remote, and automatic
SPD-SmartGlass switching, and windows that can be controlled remotely over the
internet or using a smart phone. This interactive area also contains other types
of smart glass, such as those using liquid crystal and electrochromic
technologies, allowing users to operate and experience first-hand the
differences in performance characteristics of different types of smart glass.
Additional showcases of SPD-SmartGlass are being established in other geographic
locations to make it convenient for even more people to experience the benefits
of SPD-SmartGlass technology.

18

Research Frontiers Design Center is the only known public forum where
designers, specifiers and end-users can compare
performance between SPD-Smart technology and products using other light-control
technologies. Research Frontiers believes that the growth of the smart glass
industry will accelerate as more information is made available through direct
comparisons. Research Frontiers believes that SPD products will be strongly
preferred over competing technologies once a direct comparison is available to
potential buyers. Research Frontiers continues to encourage its competitors to
participate in public forums where consumers of electronically tintable products
can see the relative performance of products that are available.

Licensees of Research
Frontiers

Currently, the
Companys licensees are categorized into four main areas: materials for making
films (emulsions), film, lamination of film to glass or plastic, and
end-products. Emulsion makers produce and combine the necessary materials (i.e.
SPD particles and various liquids and special polymers) from which SPD-Smart
films are made. The film makers coat a thin layer of emulsion between two sheets
of plastic film, each of which has a transparent conductive coating. This
emulsion is then partly solidified to form an SPD film that allows users to
control the amount of light, glare and heat passing through this film. The
end-product licensees then integrate this film into a variety of SPD-Smart
products, or make electronic systems to control such SPD-Smart products. Some of
these end-product licensees do their own lamination of the SPD light-control
film to glass or plastic, and some outsource this lamination to other companies.
The names of this growing list of licensees, and the year that their license
agreements were entered into, are contained in the Exhibit section of this
Annual Report on Form 10-K.

Licensees of Research Frontiers that incorporate SPD technology into
end-products will pay Research Frontiers a royalty of 5-15% of net sales of
licensed products under license agreements currently in effect, and may also be
required to pay Research Frontiers fees and minimum annual royalties. Licensees
that sell components (such as SPD emulsion or film) or lamination services to
other licensees of Research Frontiers do not pay a royalty on such sale or
service, and Research Frontiers will collect a royalty from the licensee
incorporating these components into their own SPD-Smart end-products. Research
Frontiers license agreements typically allow the licensee to terminate the
license after some period of time, and give Research Frontiers only limited
rights to terminate before the license expires. The licenses granted by the
Company are non-exclusive and generally last as long as Research Frontiers
patents remain in effect. Due to their bankruptcy filings or other termination
of their general business activities or for other reasons, the Company does not
believe that Polaroid Corporation, Kerros Limited, ThermoView Industries, BRG
Group, SPD Technologies, SPD Systems, SmartGlass International and Film
Technologies International are pursuing business activities with respect to SPD
technology. Also the Company and licensee N.V. Bekaert, S.A mutually agreed to
terminate their license agreement during 2008 for reasons unrelated to SPD
technology. Some of the Companys other licensees are currently inactive with
respect to SPD technology, but may hereafter become active again. To date, the
Company has not generated sufficient revenue from its licensees to profitably
fund its operations. All of the Companys license agreements are included as
exhibits to the Companys periodic reports filed with the United States
Securities and Exchange Commission (the SEC).

The Company plans to continue to exploit its SPD-Smart light-control
technology by entering into additional license and other agreements with
end-product manufacturers such as manufacturers of flat glass, flat panel
displays and automotive products, and with other interested companies who may
wish to acquire rights to manufacture and sell the Companys proprietary
emulsions and films. Although the Company believes based upon the status of
current negotiations that additional license agreements with third parties will
be entered into, there can be no assurance that any such additional license
agreements will be consummated, or of the extent to which any current or future
licensee of the Company will produce or sell commercial products using the
Companys technology or generate meaningful revenue from sales of such licensed
products.

19

The Companys plans also call for further development of its technology
and the provision of additional technological and marketing assistance to its
licensees to develop commercially viable SPD-Smart products, and expand the
markets for such products. The Company cannot predict when or if new license
agreements will be entered into or the extent to which commercial products will
result from its existing or future licensees because of general economic
conditions and the risks inherent in the developmental process and because
commercialization is dependent upon the efforts of its licensees as well as on
the continuing research and development efforts of the Company.

Competitive
Technologies

The Company believes that its SPD light-control technology has certain
performance advantages over other smart glass technologies which electrically
vary the amount of light passing through windows and other smart
products.

The Company believes that pricing and product performance are the two
main factors critical to the adoption of smart glass products. Because the
non-SPD smart glass technologies listed below do not have published, consistent
pricing or cost data that can be relied upon, the Company cannot accurately
report its price position relative to these other technologies. In terms of
product performance, the Company believes that SPD-SmartGlass technology offers
numerous advantages over other smart glass technologies as discussed below.

Variable light transmission technologies can be classified into two basic
types: active technologies that can be controlled electrically by the user
either automatically or manually, and passive technologies that can only react
to ambient environmental conditions such as changes in lighting or temperature.
One type of passive variable light transmission technology is photochromic
technology; such devices change their level of transparency in reaction to
external ultra-violet radiation. As compared to photochromic technology, the
Companys SPD technology permits the user to adjust the amount of light passing
through the viewing area of the device, rather than the viewing area of the
photochromic device merely reacting to external radiation without control by the
user. In addition, the reaction time necessary to change from light to dark with
SPD-Smart technology can be almost instantaneous, as compared to the much slower
reaction time for photochromic devices. Also, unlike SPD technology,
photochromic technology does not function well at the high and low ends of the
temperature range in which smart windows and other devices are normally expected
to operate, nor does photochromic technology perform well in vehicles or other
enclosed settings where existing glass is blocking incoming ultra-violet light
which is required for photochromic devices to operate.

Similarly, thermochromic smart windows are passive systems which change
their light transmission properties as sunlight heats or cools the glass.
Because the light transmission properties of thermochromic systems are not
controlled by the user, their ability to adapt to the specific needs of
occupants is very limited. For example, thermochromic glazings will remain
tinted on hot days even when occupants desire more daylight to enter the
building or when they want to preserve their views. SPD-Smart windows, which
require very low amounts of power to operate, allow for much greater control of
incoming light, glare and heat and can be adjusted to any level of light
transmission from dark to clear at any time. In addition, SPD-Smart windows can
block up to 99.5% of incoming light, a level many times darker than
thermochromic systems. The added advantage offers much higher levels of privacy
and control over incoming solar energy. Companies involved in thermochromic
technology include Pleotint, Suntek and Ravenbrick.

20

Active, user-controllable technologies, sometimes referred to as smart
technologies, are generally more useful than passive technologies because they
allow the user to actually control the state of the window. This control is
achieved with a manual adjustment, or automatically when coupled with a timer or
sensing device such as a photocell, motion detector, thermostat or other
intelligent building system. There are three main types of active devices which
are compared below:

Electrochromic devices
(EC)

Liquid crystal devices (LC)

Suspended-particle devices (SPD)

Electrochromic
Technology:

Electrochromic windows and rear-view
mirrors use a direct current voltage to alter the molecular structure of
electrochromic materials (which can be in the form of either a liquid, gel or
solid film) causing the material to darken. When compared to electrochromic
devices, SPD technology is expected to have numerous potential performance and
manufacturing advantages, including some or all of the following:

ability to precisely tune an
infinite number of intermediate light-transmission states

consistent and uniform switching
speed regardless of size of glazing area

more reliable performance over a
wider temperature range

higher contrast ratios and the
capability of achieving darker shaded states for large area product
applications

unpowered state is dark, maximizing
solar heat gain benefits when the room, office or vehicle is not in use

lower electrical current drain

higher estimated battery life in
applications where batteries are used

no iris effect (where light
transmission changes first occur at the outer edges of a window or mirror and
then work their way toward the center) when changing from clear to dark and
back again

SPD technology is a film-based
technology that can be applied to plastic as well as glass, and which can be
applied to curved as well as flat surfaces

available in single panels for
retrofitting existing windows, skylights and doors

Many companies with substantially greater resources than Research
Frontiers such as 3M, Gentex Corp., Pilkington, PPG Industries, Saint-Gobain and other large corporations have pursued or are pursuing projects in the
electrochromic area. While some of these companies have reportedly discontinued
or substantially curtailed their work on electrochromics due to technical
problems and issues relating to the expense of these technologies, at least four
companies (Gentex, PPG Industries, View (formerly known as Soladigm), and Sage
Electrochromics) are currently working to commercialize electrochromic window
products. In May 2012, Saint-Gobain acquired Sage Electrochromics and combined
all of their respective electrochromic manufacturing and developmental
efforts.

21

Liquid Crystal Technology:

To date, the main types of liquid
crystal smart windows have been produced by Taliq Corp. (a subsidiary of Raychem
Corp. which has since discontinued its liquid crystal operations and licensed
its technology to others), Asahi Glass Co., Nippon Sheet Glass, Saint-Gobain
Glass, iGlass Projects Pty Limited, Polytronix, Inc., DMDisplays, and 3M (which
has also reportedly discontinued its liquid crystal film making operations). The
first four companies listed above are also licensees of Research Frontiers Inc.
for SPD-Smart technology. Liquid crystal windows only change from a cloudy,
opaque milky-white to a clear state, are hazy when viewed at an angle and have
no useful intermediate states. As compared to liquid crystal windows, SPD smart
windows are expected to have some or all of the following advantages:

have less haze

provide shading without loss of view

operate over a wider temperature
range

use less power

have higher contrast ratios

absorb and block more light, rather
than simply scatter it

permit an infinite number of
intermediate states between a transparent state and a dark blue state, rather
than being just two states.

offer superior solar heat gain
control

In the flat panel display market, further development (such as the
achievement of faster switching speeds sufficient for full-motion video
applications) is required if the Company expects to compete against display
technologies that are currently being used commercially such as liquid crystal
displays (LCDs) and organic light-emitting diodes (OLEDs). Some of the
advantages that SPD displays might have include the ability to make displays
without using sheet polarizers or alignment layers, and lower light loss and a
corresponding reduction in backlighting requirements. However, such products
need additional product design, engineering or testing before an evaluation of
the commercial potential of such SPD-SmartGlass products can be determined and
when, or if, its licensees may begin to penetrate the flat panel display market.

LCDs and other types of displays, liquid crystal windows, as well as
electrochromic self-dimmable rear-view mirrors, are already on the market,
whereas products incorporating SPD technology (as well as electrochromic
windows) have only begun to appear in the marketplace. Therefore, the long-term
durability and performance of SPD-Smart displays have not yet been fully
ascertained. The companies manufacturing LCD and other display devices, liquid
crystal windows, and electrochromic self-dimmable rear-view mirrors and windows,
have substantially greater financial resources and manufacturing experience than
the Company. There is no assurance that comparable systems having the same
advantages of the Companys SPD technology could not be developed by competitors
at a lower cost or that other products could not be developed which would render
the Companys products difficult to market or otherwise render our products
obsolete.

22

Research and
Development

As a result of the Companys research and development efforts, the
Company believes that its SPD technology is now, or with additional development
will become, usable in a number of commercial products. Such products may
include one or more of the following fields: smart windows, doors, skylights
and partitions; variable light transmission eyewear such as sunglasses and
goggles; self-dimmable automotive sunroofs, sunvisors, and mirrors; display
cases/frames; and instruments and other information displays that use digits,
letters, graphic images, or other symbols to supply information, including
scientific instruments, aviation instruments, automobile dashboard displays and,
if certain improvements can be made in various features of the Companys SPD
technology that increases switching speed to the levels needed for video
applications, portable computer displays and flat panel television
displays.

Even though the Companys SPD technology has much faster switching speeds
than electrochromic technology, current switching speeds are not fast enough for
such video applications. The Company believes that most of its research and
development efforts have applicability to products that may incorporate the
Companys technology. At its current state of development, the Companys
technology has been judged sufficiently advanced by various of its licensees and
their customers for them to proceed with the development, introduction and sale
of SPD-Smart products. However, the Company is continuously investing in
research and development because it believes that further improvements will
result in accelerated and increased market penetration. The Company intends to
continue its research and development efforts for the foreseeable future to
improve its SPD light-control technology and thereby assist our licensees in the
product development, sales and marketing of various existing and new SPD-Smart
products.

During the past few years, and during the past year in particular, the
Company and/or its licensees have made significant advances relating to
materials to enable (1) improved stability of SPD emulsions, (2) a wider range
of light transmission, (3) improved film adhesion and cohesion and (4) increased
durability of SPD films/laminates, and (5) cost reductions.

The Company has devoted most of the resources it has heretofore expended
to research and development activities with the goal of producing commercially
viable SPD products and has developed working prototypes of SPD-Smart products
for several different applications, with primary emphasis on smart windows for
various industries. In addition to working with the Companys licensees,
Research Frontiers has also expanded its efforts to also work directly with some
of our licensees major customers.

Research Frontiers main goals in its
research and development include:

quantifying the degree of energy
savings expected by users of the Companys technology including the degree
that SPD technology can control heat and its contribution to energy savings
directly and through daylight harvesting strategies in sustainable building
designs.

Continually striving to improve the
performance and reducing material/production costs associated with making
SPD-Smart products

23

Excluding non-cash expenses of approximately $648,000, $143,000, and
$108,000, associated with the grant of stock options and restricted stock to the
Companys technical personnel, Research Frontiers incurred approximately $1,555,000, $1,529,000, and $1,283,000, during the years ended December 31, 2013,
2012, and 2011, respectively, for research and development. Research Frontiers
plans to engage in substantial continuing research and development activities to
invest in future improvements in SPD light-control technology and to expand for
its licensees the capabilities of SPD-Smart technology and the markets for
SPD-Smart products.

Patents and Proprietary
Information

Research Frontiers continues to make substantial investments to develop,
license and protect its intellectual property position. The Company has 27
United States and 234 foreign patents in force. The Companys patents expire at
various dates from 2014 through 2029, while its foreign patents expire at
various dates from 2014 through 2030.

The Company has current US and foreign patent applications that, if
granted, would add a significant number of additional patents to its portfolio.
The Company believes that its SPD light-control technology is adequately
protected by its patent position and by its proprietary technological know-how.
However, the validity of the Companys patents has never been contested in any
litigation. The Company also possesses know-how and relies on trade secrets and
nondisclosure agreements to protect its technology. The Company generally
requires any employee, consultant, or licensee having access to its confidential
information to execute an agreement whereby such person agrees to keep such
information confidential.

Rights Plan

In February 2013, the Companys Board of Directors adopted a Stockholders Rights Plan (the Rights Plan) and declared a dividend distribution of one right (a Right) for each outstanding share of Company common stock to stockholders of record at the close of business on March 3, 2003 (Record Time) and authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time and prior to the Separation Time.

Separation Time shall mean the earlier of the Close of Business on the tenth Business Day (or such later date as the Board of Directors may from time to time fix by resolution adopted prior to the Separation Time that otherwise would have occurred) following but not including (i) the date on which any Person commences a tender or exchange offer that, if consummated, would result in such Persons becoming an Acquiring Person, and (ii) the date of the first event causing a Flip-in Date to occur; provided that if any tender or exchange offer referred to in clause (i) of this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made.

Subject to certain exceptions listed in the Rights Plan, if a person or group has acquired beneficial ownership of, or commences a tender or exchange offer for, 15% or more of the Companys common stock, unless redeemed by the Companys Board of Directors, each Right entitles the holder (other than the acquiring person) to purchase from the Company $80 worth of common stock for $40. If the Company is merged into, or 50% or more of its assets or earning power is sold to, the acquiring company, the Rights will also enable the holder (other than the acquiring person) to purchase $80 worth of common stock of the acquiring company for $40. The Rights will expire at the close of business on February 11, 2023, unless the Rights Plan is extended by the Companys Board of Directors or unless the Rights are earlier redeemed by the Company at a price of $.0001 per Right. The Rights are not exercisable during the time when they are redeemable by the Company.

The above description highlights some of the features of the Companys Rights Plan and is not a complete description of the Rights Plan. A more detailed description and copy of the Rights Plan has been filed with the SEC and is available from the Company upon request.

Subsequent Event:

The Company currently occupies approximately 9,500 square feet for its
executive office, research facility and SPD-Smart Glass Design Center at 240
Crossways Park Drive, Woodbury, New York 11797 (Company Office) under a lease
expiring March 31, 2014. On February 21, 2014, the Company amended its lease
agreement for the Company Office. The amended lease agreement for the Company
Office expires on March 31, 2025 and will result in reduced rental costs for
the Company over the life of the lease.

24

Available
Information

Our principal executive offices are located at 240 Crossways Park Drive,
Woodbury, New York 11797, our telephone number is (516) 364-1902, and our
Internet website address is www.SmartGlass.com. We make available
free of charge on or through our Internet website our annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy
statements on Schedule 14A, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as
soon as reasonably practicable after we electronically file such materials with,
or furnish them to, the SEC.

ITEM 1A. RISK FACTORS

In addition to the other information in this Annual Report on Form 10-K,
you should carefully consider the following factors in evaluating us and our
business. This Annual Report contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties, some of which
are beyond our control. Should one or more of these risks and uncertainties
materialize or should underlying assumptions prove incorrect, our actual results
could differ materially. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below, as well as
those discussed elsewhere in this Annual Report, including the documents
incorporated by reference.

There are risks associated with investing in companies such as ours who
are primarily engaged in research and development. In addition to risks which
could apply to any company or business, you should also consider the business we
are in and the following:

Source and Need for Capital.

As of December 31, 2013, we had approximately $10.9 million in cash, cash
equivalents and short-term investments. As we take steps in the
commercialization and marketing of our technology, or respond to potential
opportunities and/or adverse events, our working capital needs may change. We
anticipate that if our cash and cash equivalents are insufficient to satisfy our
liquidity requirements, we will require additional funding to sustain our
ongoing operations and to continue our SPD technology research and development
activities.

We have funded most of our activities through sales of our common stock
to investors, and upon the exercise of options and warrants. Eventual success of
the Company and generation of positive cash flow will be dependent upon the
extent of commercialization of products using the Company's technology by the
Company's licensees and payments of continuing royalties on account thereof. We
can give no assurances that we will generate sufficient revenues in the future
(through sales of our common stock, exercise of options and warrants, royalty
fees, or otherwise) to satisfy our liquidity requirements or sustain future
operations, or that additional funding, if required, will be available when
needed or, if available, on favorable terms.

25

History of Operating Losses.

We have experienced net losses from operations, and we may continue to
incur net losses from operations in the future. We have incurred substantial
costs and expenses in researching and developing our SPD technology. As of
December 31, 2013, we had a cumulative net loss of $93,316,974 since our
inception. Our net loss was $5,845,087 in 2013, $3,063,601 in 2012, and
$4,134,068 in 2011 (which includes non-cash accounting charge in 2013, 2012 and
2011 of $2,719,380, $878,578, and $702,837, respectively, resulting from the
expensing of grants of restricted stock and stock options).

We have never declared a cash
dividend and do not intend to declare a cash dividend in the foreseeable future.

We have never declared or paid cash dividends on our common stock.
Payment of dividends on our common stock is within the discretion of our Board
of Directors and will depend upon our future earnings, capital requirements,
financial condition and other relevant factors. We do not anticipate declaring
or paying any cash dividends on our common stock in the foreseeable future.

We do not directly manufacture
products using SPD technology. We currently depend upon the activities of our
licensees and their customers in order to be profitable.

We do not directly manufacture products using SPD technology. We
currently depend upon the activities of our licensees in order to be profitable.
Although a variety of products have been sold by our licensees, and because it
is up to our licensees to decide when and if they will introduce products using
SPD technology, we cannot predict when and if our licensees will generate
substantial sales of such products. Our SPD technology is currently licensed to
over 40 companies. Other companies are also evaluating SPD technology for use in
various products. In the past, some companies have evaluated our technology
without proceeding further. While we expect that our licensees would be
primarily responsible for manufacturing and marketing SPD-Smart products and
components, we are also engaging in market development activities to support our
licensees and build the smart glass industry. We cannot control whether or not
our licensees will develop SPD products. Some of our licensees appear to be more
active than others, some appear to be better capitalized than others, and some
licensees appear to be inactive. There is no guarantee when or if our licensees
will successfully produce any commercial product using SPD technology in
sufficient quantities to make the Company profitable.

SPD-Smart products have only
recently been introduced.

Products using SPD technology have only recently begun to be introduced
into the marketplace. Developing products using new technologies can be risky
because problems, expenses and delays frequently occur, and costs may or may not
come down quickly enough for such products using new technologies to rapidly
penetrate mass market applications.

The market for SPD-Smart products is intensely competitive and we expect
competition to increase in the future. We compete based on the functionality and
the quality of our product. Many of our current and potential competitors have
significantly greater financial, technical, marketing and other resources than
we have. In addition, many of our competitors have well-established
relationships with our current and potential customers and have extensive
knowledge of our industry. If our competitors develop new technologies or new
products, improve the functionality or quality of their current products, or
reduce their prices, and if we are unable to respond to such competitive
developments quickly either because our research and development efforts do not
keep pace with our competitors or because of our lack of financial resources, we
may be unable to compete effectively.

26

Declining production of
automobiles, airplanes, boats and real estate could harm our business.

Our licensees commercialization efforts of SPD-Smart products could be
negatively impacted if the global production of automobiles, airplanes, boats
and real estate construction declines significantly. If such commercialization
is reduced, our revenues, results of operations and financial condition could be
negatively impacted.

Single source of SPD film.

Our end-product licensees require a source of SPD film to manufacture
finished products. Currently, Hitachi Chemical is the sole source of commercial
quantities of SPD-film. There are several other companies that are licensed to
manufacture SPD-film, but they have not begun commercial production of this
film. Our end-product licensees ability to sell SPD products could be
negatively impacted if there was a prolonged disruption in SPD-film
availability. Such a disruption could also negatively impact our revenues,
results of operations and financial condition.

We are dependent on key
personnel.

Our continued success will depend, to a significant extent, on the
services of our directors, executive management team, key personnel and certain
key scientists. If one or more of these individuals were to leave the Company,
there is no guarantee that we could replace them with qualified individuals in a
timely or economically satisfactory manner or at all. The loss or unavailability
of any or all of these individuals could harm our ability to execute our
business plan, maintain important business relationships and complete certain
product development initiatives, which would have a material adverse effect on
our business, results of operations and financial conditions.

Dependence on SPD-Smart
technology.

Because SPD technology is the only technology we work with, our success
depends upon the viability of SPD technology which has yet to be fully proven.
We have not fully ascertained the performance and long-term reliability of our
technology, and therefore there is no guarantee that our technology will
successfully be incorporated into all of the products which we are targeting for
use of SPD technology. We expect that different product applications for SPD
technology will have different performance and reliability specifications. We
expect that our licensees will primarily be responsible for reliability testing,
but that we may also continue to do reliability testing so that we can more
effectively focus our research and development efforts towards constantly
improving the performance characteristics and reliability of products using SPD
technology.

27

Our patents and other protective
measures may not adequately protect our proprietary intellectual property, and
we may be infringing on the rights of others.

Our
intellectual property, particularly our proprietary rights in our SPD
technology, is critical to our success. We have received various patents, and
filed other patent applications, for various applications and aspects of our SPD
technology. In addition, we generally enter into confidentiality and invention
agreements with our employees and consultants. Such patents and agreements and
various other measures we take to protect our intellectual property from use by
others may not be effective for various reasons generally applicable to patents
and their granting and enforcement. In addition, the costs associated with
enforcing patents, confidentiality and invention agreements or other
intellectual property rights may be expensive. Our inability to protect our
proprietary intellectual property rights or gain a competitive advantage from
such rights could harm our ability to generate revenues and, as a result, our
business and operations.

ITEM 1B. UNRESOLVED STAFF
COMMENTS

None

ITEM 2. PROPERTIES

The Company currently occupies approximately 9,500 square feet of space
at an annual rental which in 2013 was approximately $200,000 for its executive
office, research facility and SPD-Smart Glass Design Center at 240 Crossways
Park Drive, Woodbury, New York 11797 under a lease expiring March 31, 2014. The
Company believes that its space, including its laboratory facilities, is
adequate for its present needs.

On February 21, 2014, the Company amended its lease agreement for the
Company Office. The amended lease agreement for the Company Office (as previously defined), which
includes the same space currently occupied by the Company. The new lease expires on March 31,
2025 and will result in reduced rental costs for the Company over the life of
the lease.

ITEM 3. LEGAL
PROCEEDINGS

Research Frontiers Inc. v. E Ink
Corporation et al

On July 12, 2013, Research Frontiers Inc. initiated a lawsuit
against E Ink Corporation; E Ink Holdings, Inc. (f/k/a Prime View International
Co., Ltd.); Amazon.com, Inc.; Sony Electronics Inc.; Sony Corporation; Barnes
& Noble, Inc.; and Barnesandnoble.com LLC in the United States District
Court for the District of Delaware for patent infringement.

Research Frontiers seeks an injunction in addition to monetary damages
and pre-judgment interest and other relief. In this lawsuit, Research Frontiers
asserts infringement by the named defendants of United States Patent No.
6,606,185, entitled "SPD Films and Light Valves Comprising Liquid Suspensions of
Heat-Reflective Particles of Mixed Metal Oxides and Methods of Making Such
Particles," and United States Patent No. 5,463,491, entitled "Light Valve
Employing a Film Comprising an Encapsulated Liquid Suspension, and Method of
Making Such Film."

28

On December 2,
2013 Research Frontiers amended its complaint and asserted an additional claim
of United States No. 6,271,956 entitled Method and Materials for Enhancing the
Adhesion of SPD Films, and Light Valves Comprising Same. No hearing or trial
dates have been set.

In general, many patent infringement lawsuits end in a negotiated
settlement before trial; lawsuits that do not settle, however, can often last
more than two to three years from the date the complaint is filed until a trial
is concluded. The timeframe is influenced by a number of factors specific to
each case. Also in the course of a typical patent litigation, defendants often
attempt to challenge the infringement, validity, scope, and enforceability of
certain of plaintiffs patents.

Any action we take to protect intellectual property rights could be
costly and could require significant amounts of time by key members of executive
management and other personnel. Research
Frontiers entered into a contingency agreement with its legal counsel regarding this matter that reduces the Companys exposure to the costs associated with the prosecution of this
litigation.

ITEM 4. MINE SAFETY
DISCLOSURES

N/A

29

PART II

ITEM 5.

MARKET
FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

(a) Market Information

(1)

The Companys common
stock is traded on the NASDAQ Capital Market under the symbol REFR. As
of March 10, 2014, there were 23,109,665 shares of common stock
outstanding.

(2)

The following table
sets forth the range of the high and low selling prices (as provided by
the National Association of Securities Dealers) of the Companys common
stock for each quarterly period within the past two fiscal
years:

Quarter Ended

Low

High

March
31, 2012

3.39

4.59

June 30, 2012

2.79

3.63

September 30,
2012

2.80

4.99

December 31, 2012

3.25

5.17

March
31, 2013

2.93

4.10

June 30, 2013

3.31

4.91

September 30, 2013

3.75

5.15

December 31, 2013

4.18

7.64

These quotations may
reflect inter-dealer prices, without retail mark-up, mark-down, or
commission, and may not necessarily represent actual
transactions.

(b) Approximate Number of Security Holders

As of March 7,
2014, there were approximately 410 holders of record of the Companys common
stock and the closing price of our common stock was $6.09 per share. The
Company estimates that there are approximately 6,900 beneficial holders of the
Companys common stock.

(c) Dividends

The Company has not declared or paid cash dividends on its common stock
for the two most recent fiscal years and does not expect to declare or pay any
cash dividends in the foreseeable future. There are no restrictions on the
payment of dividends.

(d) Issuer Purchases of Equity Securities

None.

30

ITEM 6. SELECTED FINANCIAL
DATA

The following
table sets forth selected data regarding the Companys operating results and
financial position. The data for fiscal years 2013, 2012, and 2011 should be
read in conjunction with Managements Discussion and Analysis of Financial
Condition and Results of Operations and our audited consolidated financial
statements and notes thereto, which are contained in this Annual Report on Form
10-K.

Year ended December 31,

2013

2012

2011

2010

2009

Statement of Operations Data:

Fee
income

$

2,161,359

$

1,957,336

$

845,982

$

767,522

$

709,811

Operating expenses (1)

5,841,268

3,995,633

3,618,635

3,253,250

3,183,492

Research and
development (1)

2,203,326

1,671,872

1,390,689

1,404,654

1,549,707

Total Expenses

8,044,594

5,667,505

5,009,324

4,657,904

4,733,199

Operating loss

(5,883,235

)

(3,710,169

)

(4,163,342

)

(3,890,382

)

(4,023,388

)

Net investment income

38,148

33,171

29,274

15,517

20,627

Net loss before provision

for income tax benefit

(5,845,087

)

(3,676,998

)

(4,134,068

)

(3,874,865

)

(4,002,761

)

Income tax
benefit

-

613,397

-

-

-

Net loss

$

(5,845,087

)

$

(3,063,601

)

$

(4,134,068

)

$

(3,874,865

)

$

(4,002,761

)

Basic and diluted net loss

per common share

$

(0.25

)

$

(0.15

)

$

(0.22

)

$

(0.22

)

$

(0.25

)

Dividends per
share

$

0.00

$

0.00

$

0.00

$

0.00

$

0.00

Weighted average number of

common shares outstanding

22,946,019

20,125,309

18,538,041

17,321,360

16,065,248

As of December 31,

2013

2012

2011

2010

2009

Balance Sheet Data:

Total current assets

$

11,945,295

$

14,333,421

$

4,312,104

$

7,455,820

$

4,307,485

Total assets

12,032,265

14,415,067

4,417,137

7,784,691

4,473,860

Total shareholders
equity

11,869,937

14,172,675

4,107,198

7,472,452

4,165,337

____________________

(1)

Reflects non-cash charges of
$2,071,086, $735,544, $594,492, $602,218 and $419,879, to operating
expenses, and non-cash charges of $648,294, $143,026, $108,345, $170,386
and $26,034, to research and development expenses relating to the issuance
of stock and stock options in 2013, 2012, 2011, 2010, and 2009,
respectively which increased the Companys net loss for 2013, 2012, 2011,
2010, and 2009, by $2,719,380, $878,578, $702,837, $772,604 and $445,913,
respectively.

31

ITEM
7.

MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Forward-Looking Statements

Information
included in this Annual Report on Form 10-K may contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are not statements of historical facts, but
rather reflect our current expectations concerning future events and results. We
generally use the words believes, expects, intends, plans,
anticipates, likely, will and similar expressions to identify
forward-looking statements. Such forward-looking statements, including those
concerning our expectations, involve risks, uncertainties and other factors,
some of which are beyond our control, which may cause our actual results,
performance or achievements, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. These risks, uncertainties and factors include,
but are not limited to, those factors set forth in this Annual Report on Form
10-K under Item 1A.  Risk Factors above. Except as required by applicable
law, including the securities laws of the United States, we undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. You are cautioned
not to unduly rely on such forward-looking statements when evaluating the
information presented in this Annual Report on Form 10-K.

In reviewing Managements Discussion and Analysis of Financial Condition
and Results of Operations, you should refer to our consolidated financial
statements and the notes related thereto.

Critical Accounting
Policies

The following accounting policies are important to understanding our
financial condition and results of operations and should be read as an integral
part of the discussion and analysis of the results of our operations and
financial position. For additional accounting policies, see note 2 to our
consolidated financial statements, "Summary of Significant Accounting
Policies.

The Company has entered into a number of license agreements covering
potential products using the Companys SPD technology. The Company receives fees
and minimum annual royalties under certain license agreements and records fee
income on a ratable basis each quarter. In instances when sales of licensed
products by its licensees exceed minimum annual royalties, the Company
recognizes fee income as the amounts have been earned. Certain of the fees are
accrued by, or paid to, the Company in advance of the period in which they are
earned resulting in deferred revenue.

The Company expenses costs relating to the development or acquisition of
patents due to the uncertainty of the recoverability of these items. All of our
research and development costs are charged to operations as incurred. Our
research and development expenses consist of costs incurred for internal and
external research and development. These costs include direct and indirect
overhead expenses.

The Company has historically used the Black-Scholes option-pricing model
to determine the estimated fair value of each option grant. The Black-Scholes
model includes assumptions regarding dividend yields, expected volatility,
expected lives, and risk-free interest rates. These assumptions reflect our best
estimates, but these items involve uncertainties based on market conditions
generally outside of our control. As a result, if other assumptions had been
used in the current period, stock-based compensation expense could have been
materially impacted. Furthermore, if management uses different assumptions in
future periods, stock-based compensation expense could be materially impacted in
future years.

32

On occasion,
the Company may issue to consultants either options or warrants to purchase
shares of common stock of the Company at specified share prices. These options
or warrants may vest based upon specific services being performed or performance
criteria being met. In accounting for equity instruments that are issued to
other than employees for acquiring, or in conjunction with selling, goods or
services,
the Company would be required to record consulting expenses based upon the fair
value of such options or warrants on the earlier of the service period or the
period that such options or warrants vest as determined using a Black-Scholes
option pricing model.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, and reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from these estimates.
An example of a critical estimate is the full valuation allowance for deferred
taxes that was recorded based on the uncertainty that such tax benefits will be
realized in future periods.

Results of
Operations

Year ended December 31, 2013
Compared to Year ended December 31, 2012

The majority of the Company's fee income comes from the activities of
several licensees participating in the automotive market. The Company currently
believes that the automotive market will be the largest source of its royalty
income over the next several years. The Company's royalty income from this
market may be influenced by numerous factors including various trends affecting
demand in the automotive industry and the rate of introduction of new technology
in OEM product lines. In addition to these macro factors, the Company's royalty
income from the automotive market could also be influenced by specific factors
such as whether the Company's SPD-SmartGlass technology appears as standard
equipment or as an option on a particular vehicle, the number of additional
vehicle models that SPD-SmartGlass appears on, the size of each window on a
vehicle and the number of windows on a vehicle that use SPD-SmartGlass,
fluctuations in the total number of vehicles produced by a manufacturer, and in
the percentage of cars within model like produced with SPD-SmartGlass, and
changes in pricing or exchange rates.

The Company's fee income from licensing activities for the year ended
December 31, 2013 increased 10% to $2,161,359, as compared to $1,957,336
for the year ended December 31, 2012. Most of the increase in fee income during
this period was a result of higher product sales and minimum annual royalty and
other payments from licensees in the automotive market. Certain license fees,
which are paid to the Company in advance of the accounting period in which they
are earned resulting in the recognition of deferred revenue for the current
accounting period, which will be recognized as fee income in future periods.
Also, licensees may offset some or all of their royalty payments on sales of
licensed products for a given period by applying these advance payments towards
such earned royalty payments. Because the Company's license agreements typically
provide for the payment of royalties by a licensee on product sales within 45
days after the end of the quarter in which a sale of a licensed product occurs
(with some of the Company's more recent license agreements providing for
payments on a monthly basis), and because of the time period which typically
will elapse between a customer order and the sale of the licensed product and
installation in a home, office building, automobile, aircraft, boat or any other
product, there could be a delay between when economic activity between a
licensee and its customer occurs and when the Company gets paid its royalty
resulting from such activity.

33

Operating
expenses increased by $1,845,635 for the year ended December 31, 2013 to
$5,841,268, from $3,995,633 for the year ended December 31, 2012. This increase
was principally the result of higher non-cash compensation charges related to
common stock and option grants to employees and directors ($1,167,000), payroll
costs ($227,000), marketing and investor relations costs ($296,000) and patent
costs ($95,000) and bad debts ($81,000).

Research and development expenditures increased by $531,454 to $2,203,326
for the year ended December 31, 2013 from $1,671,872 for the year ended December
31, 2012. This increase was principally the result of higher non-cash
compensation charges related to common stock and option grants to employees
($505,000), payroll and related costs ($104,000) partially offset by lower
materials and project costs ($28,000) as well as lower allocated insurance
($25,000) and office costs ($32,000). Included in research and development
expenses are approximately $648,000 and $143,000 of noncash compensation charges
for the year ended December 31, 2013 and 2012, respectively.

The Company's net investment income for the year ended December 31, 2013
was $38,148 as compared to $33,171 for the year ended December 31, 2012. The
difference was primarily due to interest from higher cash balances available for
investment partially offset the interest on the Note from SPD Control Systems
which was collected at the end of March 2012.

No income tax benefit or expense was recorded for the year ended December
31, 2013. The Company recorded an income tax benefit of $613,397 for the year
ended December 31, 2012. This benefit results from state research and
development refundable credits that the Company applied for related to the years
ended December 31, 2006, 2007, 2008, and 2009. The Company does not currently
expect to collect additional credits.

As a consequence of the factors discussed above, the Company's net loss
was $5,845,087 ($0.25 per common share) for the year ended December 31, 2013 as
compared to $3,063,601 ($0.15 per common share) for the year ended December 31,
2012.

Year ended December 31, 2012
Compared to the Year ended December 31, 2011

The majority of the Companys fee income comes from the activities of
several licensees participating in automotive market. The Companys fee income
from licensing activities for the year ended December 31, 2012 was $1,957,336,
as compared to $845,982 for the year ended December 31, 2011. Most of the
increase in fee income during this period was a result of higher product sales
in the automotive market from one of our licensees. This licensee's sales levels
exceeded its minimum annual royalty levels under its license agreement, thereby
resulting in the amount of royalty fee income in excess of the minimum annual
royalty being recognized as additional fee income. Certain license fees, which
are paid to the Company in advance of the accounting period in which they are
earned resulting in the recognition of deferred revenue for the current
accounting period, which will be recognized as fee income in future periods.
Also, licensees may offset some or all of their royalty payments on sales of
licensed products for a given period by applying these advance payments towards
such earned royalty payments. Because the Companys license agreements typically
provide for the payment of royalties by a licensee on product sales within 45
days after the end of the quarter in which a sale of a licensed product occurs
(with some of the Companys more recent license agreements providing for
payments on a monthly basis), and because of the time period which typically
will elapse between a customer order and the sale of the licensed product and
installation in a home, office building, automobile, aircraft, boat or any other
product, there could be a delay between when economic activity between a
licensee and its customer occurs and when the Company gets paid its royalty
resulting from such activity.

34

Operating
expenses increased by $376,998 for the year ended December 31, 2012 to
$3,995,633 from $3,618,635 for the year ended December 31, 2011. This increase
was principally the result of higher payroll and related costs ($285,000), plus
higher professional fees ($71,000). Included in operating expenses are
approximately $736,000 and $594,000 of non cash compensation charges for the
years ended December 31, 2012 and 2011, respectfully, relating to common stock
and options granted to directors, employees and consultants.

Research and development expenditures increased by $281,183 to $1,671,872
for the year ended December 31, 2012 from $1,390,689 for the year ended December
31, 2011. This increase was principally the result of higher payroll and related
costs ($103,000) as well as higher materials and project costs ($98,000) and
higher allocated office costs ($64,000). Included in research and development
expenses are approximately $143,000 and $108,000 of non-cash compensation
charges for the years ended December 31, 2012 and 2011, respectively.

The Companys net investment income for the year ended December 31, 2012
was $33,171 as compared to $29,724 for the year ended December 31, 2011. The
difference was primarily due to interest from higher cash balances available for
investment partially offset the interest on the Note from SPD Control Systems
which was collected at the end of March 2012.

The Company recorded an income tax benefit of $613,397 for the year ended
December 31, 2012. This benefit results from state research and development
refundable credits that the Company applied for related to the years ended
December 31, 2006, 2007, 2008, and 2009. The Company does not currently expect
to collect additional credits. No income tax benefit or expense was recorded for
the year ended December 31, 2011.

As a consequence of the factors discussed above, the Company's net loss
was $3,063,601 ($0.15 per common share) for the year ended December 31, 2012 as
compared to $4,134,068 ($0.22 per common share) for the year ended December 31,
2011.

Financial Condition, Liquidity
and Capital Resources

The Company has primarily utilized its cash, cash equivalents, short-term
investments, and the proceeds from its investments to fund its research and
development, for marketing initiatives, and for other working capital purposes.
The Companys working capital and capital requirements depend upon numerous
factors, including, but not limited to, the results of research and development
activities, competitive and technological developments, the timing and costs of
patent filings, and the development of new licensees and changes in the
Companys relationship with existing licensees. The degree of dependence of the
Companys working capital requirements on each of the foregoing factors cannot
be quantified; increased research and development activities and related costs
would increase such requirements; the addition of new licensees may provide
additional working capital or working capital requirements, and changes in
relationships with existing licensees would have a favorable or negative impact
depending upon the nature of such changes.

35

During 2013, the Companys cash and cash equivalents
balance decreased by $2,524,110. This decline was mainly due to: (i) cash used for operations, and (ii) cash received from financing activities. The Company’s reported net loss in 2013 produced ($3,244,859) of cash
used for operations. The negative impact from cash used for operations on the Companys cash and cash equivalents balance was partially
offset by proceeds from the exercise of options and warrants of $795,294. At December 31, 2013, the Company had working capital
of $11,782,967 and total shareholders’ equity of $11,869,937.

During 2012, the Companys cash and cash equivalents balance increased by
$5,986,869 principally as a result of cash proceeds from the sale of common
stock of $12,250,500 partially offset by cash used for operations of $2,679,093
as well as net cash invested in certificates of depositsof $3,797,865.

The Company expects to use its cash to fund its research and development
of SPD light valves, its expanded marketing initiatives, and for other working
capital purposes. The Companys working capital and capital requirements depend
upon numerous factors, including the results of research and development
activities, competitive and technological developments, the timing and cost of
patent filings, the development of new licensees and changes in the Companys
relationships with its existing licensees. The degree of dependence of the
Companys working capital requirements on each of the foregoing factors cannot
be quantified; increased research and development activities and related costs
would increase such requirements; the addition of new licensees may provide
additional working capital or working capital requirements, and changes in
relationships with existing licensees would have a favorable or negative impact
depending upon the nature of such changes. Based upon existing levels of cash
expenditures, existing cash reserves and budgeted revenues, the Company believes
that it would not require additional funding for the forseeable future. There
can be no assurance that expenditures will not exceed the anticipated amounts or
that additional financing, if required, will be available when needed or, if
available, that its terms will be favorable or acceptable to the Company.
Eventual success of the Company and generation of positive cash flow will be
dependent upon the extent of commercialization of products using the Companys
technology by the Companys licensees and payments of continuing royalties on
account thereof. To date the Company has not generated sufficient revenue from
its licensees to fund its operations.

Inflation

The Company does not believe that inflation has a significant impact on
its business.

36

Contractual
Obligations

The Company occupies premises under an operating lease agreement which
was to expire on March 31, 2014 and has recently been extended through 2025 and
requires minimum annual rent which rises over the
term of the lease to approximately $177,000, plus tenants share of applicable
taxes. These lease obligations are summarized over time as of December 31,
2013:

Payments due by
period

<1 year

1-3 years

4-5 years

>5 years

Total

Operating lease obligations

$

163,000

$

342,000

$

366,000

$

1,294,000

$

2,165,000

Off-Balance Sheet
Arrangements

We have no variable interest entities or other
off-balance sheet obligation arrangements.

Related Party
Transactions

None.

Forward Looking
Statements

The information set forth in this
Report and in all publicly disseminated information about the Company, including
the narrative contained in Managements Discussion and Analysis of Financial
Condition and Results of Operations above, includes forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and is subject to the safe harbor created by that section.
Readers are cautioned not to place undue reliance on these forward-looking
statements as they speak only as of the date hereof and are not guaranteed.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK

At times, the Company invests available cash and cash
equivalents in money market funds or in short-term U.S. treasury securities with
maturities that are generally one year or less. Although the rate of interest
paid on such investments in money market funds may fluctuate over time, each of
the Companys investments in U.S. treasury securities is made at a fixed
interest rate over the duration of the investment. Accordingly, the Company does
not believe it is materially exposed to changes in interest rates as it
generally holds these treasury securities until maturity.

The Company does not currently have
any sales, purchases, assets or liabilities determined in currencies other than
the U.S. dollar, and as such, is not subject to foreign currency exchange risk.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

The consolidated financial
statements listed in Item 15(a)(1) and (2) are included in this Report beginning
on page F-1.

37

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND
PROCEDURES

Conclusion Regarding the
Effectiveness of Disclosure Controls and Procedures

As of the end of the period covered
by this Annual Report on Form 10-K, the Company carried out an evaluation, under
the supervision and with the participation of the Company's management,
including the Companys Chairman and its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-15(e) and 15d-15(e). Based upon that evaluation, the Company's Chairman and
its Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective in timely alerting
them to material information relating to the Company (including its consolidated
subsidiary) required to be included in the Company's periodic SEC filings. Our
officers have concluded that as of December 31, 2013 our disclosure controls and
procedures are designed, and are effective, to ensure that information required
to be disclosed by our company in the reports we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the commissions rules and forms, and are also effective to
ensure that information required to be disclosed in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, to allow
timely decisions regarding required disclosure. There were no changes in the
Company's internal control over financial reporting during the quarterly period
ended December 31, 2013 that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.

Managements Report
on Internal Control over Financial Reporting

Our management is responsible for
establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f). Our internal control
system is designed to provide reasonable assurance to our management and Board
of Directors regarding the preparation and fair presentation of published
financial statements. Under the supervision and with the participation of our
management, including our chief executive officer and chief financial officer,
we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control-Integrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway
Commission, or the COSO Framework. Based on our evaluation under the COSO
Framework (1992) our management concluded that our internal control over financial
reporting was effective as of December 31, 2013.

The effectiveness of our internal
control over financial reporting as of December 31, 2013 has been independently
audited by BDO USA, LLP, an independent registered public accounting firm, as
stated in its report that is included herein.

38

Report of Independent
Registered Public Accounting Firm

The Shareholders and Board
of DirectorsResearch Frontiers IncorporatedWoodbury, New York

We have audited Research Frontiers
Incorporateds internal control over financial reporting as of December 31,
2013, based on criteria established in Internal Control-Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Research Frontiers Incorporateds management is responsible
for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Item 9A, Managements Report on Internal Control
Over Financial Reporting. Our responsibility is to express an opinion on the
Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.

A companys internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys
assets that could have a material effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, Research Frontiers
Incorporated maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2013, based on the COSO criteria.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Research Frontiers Incorporated as
of December 31, 2013 and 2012, and the related consolidated statements of
operations, shareholders equity, and cash flows for each of the three years in
the period ended December 31, 2013 and our report dated March 10, 2014 expressed
an unqualified opinion thereon.

/s/ BDO USA,
LLPMelville, New YorkMarch 10, 2014

39

ITEM 9B.

OTHER
INFORMATION

None.

PART
III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

The Company has adopted a code of
ethics applicable to its Chief Executive Officer, Chief Operating Officer,
Treasurer and Chief Financial Officer, any Vice President and other employees of
the Company with important roles in the financial reporting process. This Code
of Ethics was adopted by the entire Board of Directors of the Company, including
all of its Audit Committee members, in March 2004 in accordance with the
requirements of the Sarbanes Oxley Act. The code of ethics is available on the
Companys website at www.SmartGlass.com and was also filed as an exhibit to the Companys Annual
Report on Form 10-K for the year ended December 31, 2003. The Company intends to
satisfy the disclosure requirement under Item 10 of Form 8-K regarding any
amendment to, or waiver from, a provision of this code of ethics by posting such
information on the website specified above.

The other information required by
this Item 10 is incorporated by reference to the Companys definitive Proxy
Statement to be filed with the Commission on or before April 30, 2014, in
connection with the Companys Annual Meeting of Stockholders scheduled to be
held on June 12, 2014.

ITEM 11.

EXECUTIVE
COMPENSATION

The information required by this
Item 11 is incorporated by reference to the Companys definitive Proxy Statement
to be filed with the Commission on or before April 30, 2014, in connection with
the Companys Annual Meeting of Stockholders scheduled to be held on June 12,
2014. Notwithstanding anything to the contrary set forth herein or in any of the
Companys past or future filings with the SEC that might incorporate by
reference the Companys definitive Proxy Statement, in whole or in part, the
report of the compensation committee and the stock price performance graph
contained in such definitive Proxy Statement shall not be incorporated by
reference into this Annual Report on Form 10-K or in any other such filings.

The information required by this
Item 12 is incorporated by reference to the Companys definitive Proxy Statement
to be filed with the Commission on or before April 30, 2014, in connection with
the Companys Annual Meeting of Stockholders scheduled to be held on June 12,
2014.

The information required by this Item 13 is incorporated
by reference to the Companys definitive Proxy Statement to be filed with the
Commission on or before April 30, 2014, in connection with the Companys Annual
Meeting of Stockholders scheduled to be held on June 12, 2014.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND
SERVICES

The information required by this
Item 14 is incorporated by reference to the Companys definitive Proxy Statement
to be filed with the Commission on or before April 30, 2014, in connection with
the Companys Annual Meeting of Stockholders scheduled to be held on June 12,
2014.

41

PART
IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K

(a)(1) and (2)
Financial
Statements and Financial Statement Schedules

The following consolidated financial
statements of Research Frontiers Incorporated are filed under Item 8. Financial
Statements and Supplemental Data of this Report.

Page

Report of Independent Registered Public Accounting
Firm

F-1

Consolidated Financial Statements:

Consolidated
Balance Sheets,

December
31, 2013 and 2012

F-2

Consolidated
Statements of Operations,

Years
ended December 31, 2013, 2012 and 2011

F-3

Consolidated
Statements of Shareholders Equity,

Years
ended December 31, 2013, 2012 and 2011

F-4

Consolidated
Statements of Cash Flows,

Years
ended December 31, 2013, 2012 and 2011

F-5

Notes to Consolidated Financial
Statements

F-6

Schedule II - Valuation and Qualifying
Accounts

F-19

All other schedules have been omitted because
they are not applicable, or not required, or the required information is
disclosed elsewhere in this Annual Report.

(a)(3)

Exhibits

3.1

Restated Certificate of Incorporation of the
Company. Previously filed as Exhibit 3.1 to the Companys Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 1994, and incorporated
herein by reference.

3.2

Amended and Restated Bylaws of the Company.
Previously filed as Exhibit 99.2 to the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2007, and incorporated herein
by reference.

4.1

Form of Common Stock Certificate. Previously
filed as an Exhibit to the Companys Registration Statement on Form S-18
(Reg. No. 33-5573NY), declared effective by the Commission on July 8,
1986, and incorporated herein by reference.

42

4.2

Rights Agreement dated as of February 18,
2003 between Research Frontiers Incorporated and Continental Stock
Transfer & Trust Company, as Rights Agent, which includes as Exhibit A
thereto the Form of Rights Certificate. Previously filed as an Exhibit to
the Companys Registration Statement on Form 8-A dated February 13, 2013,
and incorporated herein by reference.

4.3

Common Stock and Warrants Purchase Agreement
between the Company and certain investors. Previously filed as an Exhibit
4.3 to the Companys Current Report on Form 8-K dated October 2, 2012
filed with the Securities and Exchange Commission, and incorporated herein
by reference.

10.1A*

Amended and Restated
Employment Contract effective January 1, 1989 between the Company and
Robert L. Saxe. Previously filed as an Exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1993 and
incorporated herein by reference.

10.1B*

Employment Agreement
effective as of January 1, 2009 between the Company and Joseph M. Harary.
Previously filed as an Exhibit to the Companys Current Report on Form 8-K
dated April 30, 2009 and incorporated herein by
reference.

10.1C*

Employment Agreement
effective as of January 1, 2014 between the Company and Seth L. Van
Voorhees (filed herewith).

10.2*

Amended and Restated
1992 Stock Option Plan. Previously filed as Exhibit 4 to the Companys
Registration Statement on Form S-8 (Reg. No. 33-86910) filed with the
Commission on November 30, 1994, and incorporated herein by
reference.

10.3*

1998 Stock Option
Plan, as amended. Previously filed as an Exhibit to the Companys
Definitive Proxy Statement dated April 30, 1998 filed with the Commission
on April 29, 1998, 1994, and incorporated herein by reference.

10.31*

2008 Equity Incentive
Plan. Previously filed as an Exhibit to the Companys Definitive Proxy
Statement dated April 30, 2008 filed with the Commission on April 29,
2008, and incorporated herein by reference.

10.4*

Form of Stock Option
Agreement between the Company and recipients of stock options issued
pursuant to the Companys Stock Option Plans. Previously filed as part of
Exhibits 4.1, 4.2, and 4.3 to the Companys Registration Statement on Form
S-8 (Reg. No. 33-53030) filed with the Commission on October 6, 1992, and
incorporated herein by reference.

10.5

Lease Agreement dated
November 7, 1986, between the Company and Industrial & Research
Associates Co. Previously filed as an exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1986 and
incorporated herein by reference.

10.5.1

First Amendment to
Lease dated November 26, 1991 between the Company and Industrial and
Research Associates Co. Previously filed as an Exhibit to Amendment No. 1
to the Companys Registration Statement on Form S-1 (Reg. No. 33-43768)
declared effective by the Commission on December 17, 1991, and
incorporated herein by reference.

43

10.5.2

Second Amendment to
Lease dated March 11, 1994 between the Company and Industrial and Research
Associates Co. Previously filed as an exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1993 and
incorporated herein by reference.

10.5.3

Third Amendment to
Lease dated July 14, 1998 between the Company and Industrial and Research
Associates Co. Previously filed as an exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 and
incorporated herein by reference.

10.5.4

Fourth Amendment to
Lease dated January 13, 2004 between the Company and Industrial and
Research Associates Co. Previously filed as an exhibit to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and
incorporated herein by reference.

License Agreement
effective as of August 2, 1995 between the Company and General Electric
Company. Previously filed as an Exhibit to the Companys Current Report on
Form 8-K dated August 2, 1995 with portions omitted pursuant to the
Registrants request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.7

License Agreement
effective as of April 29, 1996 between the Company and Glaverbel, S.A.
Previously filed as an Exhibit to the Companys Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1996 with portions omitted
pursuant to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.8

License Agreement
effective as of January 18, 1997 between the Company and Material Sciences
Corporation. Previously filed as an Exhibit to the Companys Current
Report on Form 8-K dated March 3, 1997 with portions omitted pursuant to
the Registrant's request for confidential treatment and filed separately
with the Securities and Exchange Commission, and incorporated herein by
reference.

10.9

License Agreement
effective as of March 31, 1997 between the Company and Hankuk Glass
Industries, Inc. Previously filed as an Exhibit to the Companys Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1997 with
portions omitted pursuant to the Registrant's request for confidential
treatment and filed separately with the Securities and Exchange
Commission, and incorporated herein by reference.

10.10

License Agreement
effective as of August 8, 1997 between the Company and Orcolite, a Unit of
Monsanto Company. Previously filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
1997 with portions omitted pursuant to the Registrant's request for
confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by
reference.

44

10.11

License Agreement
effective as of June 25, 1999 between the Company and Dainippon Ink and
Chemicals, Incorporated. Previously filed as an Exhibit to the Companys
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1999
with portions omitted pursuant to the Registrant's request for
confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by reference.

10.12

License Agreement
effective as of August 9, 1999 between the Company and Hitachi Chemical
Co., Ltd. Previously filed as an Exhibit to the Companys Quarterly Report
on Form 10-Q for the fiscal quarter ended September 30, 1999 with portions
omitted pursuant to the Registrant's request for confidential treatment
and filed separately with the Securities and Exchange Commission, and
incorporated herein by reference.

10.13

License Agreement
effective as of December 3, 1999 between the Company and Global Mirror
GmbH & Co. KG. Previously filed as an Exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 with
portions omitted pursuant to the Registrant's request for confidential
treatment and filed separately with the Securities and Exchange
Commission, and incorporated herein by reference.

10.14

License Agreement
effective as of December 13, 1999 between the Company and Global Mirror
GmbH & Co. KG. Previously filed as an Exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 with
portions omitted pursuant to the Registrant's request for confidential
treatment and filed separately with the Securities and Exchange
Commission, and incorporated herein by reference.

10.15

License Agreement
effective as of March 21, 2000 between the Company and ThermoView
Industries, Inc. Previously filed as an Exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 with
portions omitted pursuant to the Registrant's request for confidential
treatment and filed separately with the Securities and Exchange
Commission, and incorporated herein by reference.

10.16

License Agreement
effective as of May 23, 2000 between the Company and Polaroid Corporation.
Previously filed as an Exhibit to the Companys Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2000 with portions omitted
pursuant to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.17

License Agreement
effective as of February 16, 2001 between the Company and AP Technoglass
Co. Previously filed as an Exhibit to the Companys Annual Report
on Form 10-K
for the fiscal year ended December 31, 2001 with portions omitted pursuant
to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

45

10.18

License
Agreement effective as of March 21, 2001 between the Company and
InspecTech Aero Service, Inc. Previously filed as an Exhibit to the
Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2001 with portions omitted pursuant to the Registrant's request for
confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by reference.

10.19

License
Agreement effective as of March 28, 2001 between the Company and Film
Technologies International, Inc. Previously filed as an Exhibit to the
Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2001 with portions omitted pursuant to the Registrant's request for
confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by reference.

10.20

License
Agreement effective as of November 29, 2001 between the Company and Avery
Dennison Corporation. Previously filed as an Exhibit to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2001
with portions omitted pursuant to the Registrant's request for
confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by reference.

10.21

License
Agreement effective as of February 4, 2002 between the Company and BOS
GmbH & Co. KG. Previously filed as an Exhibit to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2001 with
portions omitted pursuant to the Registrant's request for confidential
treatment and filed separately with the Securities and Exchange
Commission, and incorporated herein by reference.

10.22

License
Agreement effective as of March 11, 2002 between the Company and Isoclima
S.p.A. Previously filed as an Exhibit to the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2001 with portions
omitted pursuant to the Registrant's request for confidential treatment
and filed separately with the Securities and Exchange Commission, and
incorporated herein by reference.

10.23

License
Agreement effective as of July 2, 2002 between the Company and Isoclima
S.p.A. Previously filed as an Exhibit to the
Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2002 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.24

License
Agreement effective as of August 19, 2002 between the Company and Razors
Edge Technologies, Inc. Previously filed as an Exhibit to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2002
with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

46

10.25

License Agreement effective as of
October 7, 2002 between the Company and American Glass Products (Glass
Technology Investment Ltd.). Previously filed as an Exhibit to the
Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2002 with portions omitted pursuant to the Registrant's request for
confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by reference.

10.26

License Agreement effective as of
October 7, 2002 between the Company and SPD Systems, Inc. Previously filed
as an Exhibit to the Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.27

License Agreement effective as of
October 24, 2002 between the Company and Cricursa Cristales Curvados S.A.
Previously filed as an Exhibit to the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2002 with portions omitted pursuant
to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.28

License Agreement effective as of
December 9, 2002 between the Company and BRG Group, Ltd. Previously filed
as an Exhibit to the Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.29

License Agreement effective as of
December 13, 2002 between the Company and Laminated Technologies Inc.
Previously filed as an Exhibit to the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2002 with portions omitted pursuant
to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.30

License Agreement effective as of
April 17, 2003 between the Company and Custom Glass Corporation.
Previously filed as an Exhibit to the Companys Annual Report on Form
10-K/A for the fiscal year ended December 31, 2003 with portions omitted
pursuant to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.31

License Agreement effective as of
May 2, 2003 between the Company and Air Products and Chemicals, Inc.
Previously filed as an Exhibit to the Companys Annual Report on Form
10-K/A for the fiscal year ended December 31, 2003 with portions omitted
pursuant to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

47

10.32

License Agreement effective as of
May 30, 2003 between the Company and Kerros Limited. Previously filed as
an Exhibit to the Companys Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2003 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.33

License Agreement effective as of
June 6, 2003 between the Company and Traco, Inc. Previously filed as an
Exhibit to the Companys Annual Report on Form 10-K/A for the fiscal year
ended December 31, 2003 with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

10.34

License Agreement effective as of
June 16, 2003 between the Company and Saint-Gobain Glass France S.A.
Previously filed as an Exhibit to the Companys Annual Report on Form
10-K/A for the fiscal year ended December 31, 2003 with portions omitted
pursuant to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.35

License Agreement effective as of
August 1, 2003 between the Company and Vision (Environmental Innovation)
Limited. Previously filed as an Exhibit to the Companys Annual Report on
Form 10-K/A for the fiscal year ended December 31, 2003 with portions
omitted pursuant to the Registrant's request for confidential treatment
and filed separately with the Securities and Exchange Commission, and
incorporated herein by reference.

10.36

License Agreement effective as of
November 13, 2003 between the Company and Innovative Glass Corporation.
Previously filed as an Exhibit to the Companys Annual Report on Form
10-K/A for the fiscal year ended December 31, 2003 with portions omitted
pursuant to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.37

License Agreement effective as of
December 11, 2003 between the Company and Leminur Limited. Previously
filed as an Exhibit to the Companys Annual Report on Form 10-K/A for the
fiscal year ended December 31, 2003 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.38

License Agreement effective as of
March 25, 2004 between the Company and Pilkington plc. Previously filed as
an Exhibit to the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2004 with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

48

10.39

License Agreement effective as of
April 5, 2004 between the Company and SmartGlass Ireland Ltd. Previously
filed as an Exhibit to the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2004 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.40

License Agreement effective as of
April 8, 2004 between the Company and Prelco Inc. Previously filed as an
Exhibit to the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2004 with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

10.41

License Agreement effective as of
April 13, 2004 between the Company and E. I. Dupont De Nemours and
Company. Previously filed as an Exhibit to the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2004 with portions
omitted pursuant to the Registrant's request for confidential treatment
and filed separately with the Securities and Exchange Commission, and
incorporated herein by reference.

10.42

License Agreement effective as of
September 3, 2004 between the Company and Nippon Sheet Glass Co., Ltd.
Previously filed as an Exhibit to the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2004 with portions omitted pursuant
to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.43

License Agreement effective as of
October 25, 2005 between the Company and SPD Control Systems Corporation.
Previously filed as an Exhibit to the Companys Current Report on Form 8-K
dated October 31, 2005 with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

10.44

License Agreement effective as of
March 30, 2006 between the Company and Dainippon Ink and Chemicals.
Previously filed as an Exhibit to the Companys Current Report on Form 8-K
dated April 4, 2006 with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

10.45

License Agreement effective as of
May 11, 2006 between the Company and Asahi Glass Company. Previously filed
as an Exhibit to the Companys Current Report on Form 8-K dated May 15,
2006 with portions omitted pursuant to the Registrant's request for
confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by reference.

10.46

License Agreement effective as of
March 19, 2007 between the Company and SmartGlass International Ltd.
Previously filed as an Exhibit to the Companys Current Report on Form 8-K
dated March 19, 2007 with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

49

10.47

License Agreement effective as of
October 16, 2007 between Research Frontiers Incorporated and Glass
Wholesalers, Ltd. d/b/a Craftsman Fabricated Glass, Ltd. Previously filed
as an Exhibit to the Companys Current Report on Form 8-K dated October
18, 2007, and incorporated herein by reference.

10.48

License Agreement effective as of
December 14, 2007 between Research Frontiers Incorporated and AGC Flat
Glass Europe SA. Previously filed as an Exhibit to the Companys Current
Report on Form 8-K dated December 17, 2007 with portions omitted pursuant
to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.49

License Agreement effective as of
February 21, 2008 between Research Frontiers Incorporated and GKN
Aerospace Transparency Systems Inc. Previously filed as an Exhibit to the
Companys Current Report on Form 8-K dated March 5, 2008 with portions
omitted pursuant to the Registrant's request for confidential treatment
and filed separately with the Securities and Exchange Commission, and
incorporated herein by reference.

10.50

License Agreement effective as of
September 29, 2008 between Research Frontiers Incorporated and PPG
Industries, Inc. (now known as Pittsburgh Glass Works, LLC). Previously
filed as an Exhibit to the Companys Current Report on Form 8-K dated
October 6, 2008 with portions omitted pursuant to the Registrant's request
for confidential treatment and filed separately with the Securities and
Exchange Commission, and incorporated herein by reference.

10.51

License Agreement effective as of
September 10, 2009 between Research Frontiers Incorporated and Pilkington
Group Ltd. Previously filed as an Exhibit to the Companys Current Report
on Form 8-K dated September 15, 2009 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.52

License Agreement effective as of
January 25, 2010 between Research Frontiers Incorporated and Vision
Systems. Previously filed as an Exhibit to the Companys Current Report on
Form 8-K dated January 25, 2010 with portions omitted pursuant to the
Registrant's request for confidential treatment and filed separately with
the Securities and Exchange Commission, and incorporated herein by
reference.

10.53

License Agreement effective as of
February 8, 2010 between Research Frontiers Incorporated and ID Research
Pty Ltd. (iGlass). Previously filed as an Exhibit to the Companys Current
Report on Form 8-K dated February 16, 2010 with portions omitted pursuant
to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

50

10.54

License Agreement effective as of
December 13, 2010 between Research Frontiers Incorporated and Diamond
Sea-Glaze Manufacturing Ltd. Previously filed as an Exhibit to the
Companys Current Report on Form 8-K dated December 14, 2010 with portions
omitted pursuant to the Registrant's request for confidential treatment
and filed separately with the Securities and Exchange Commission, and
incorporated herein by reference.

10.55

License Agreement effective as of
December 22, 2010 between Daimler AG, Research Frontiers Incorporated and
SPD Control Systems Corp. Previously filed as an Exhibit to the Companys
Current Report on Form 8-K dated February 9, 2011 with portions omitted
pursuant to the Registrant's request for confidential treatment and filed
separately with the Securities and Exchange Commission, and incorporated
herein by reference.

10.56

License Agreement effective as of
February 19, 2013 between Tint-It JSC and Research Frontiers Incorporated.
Previously filed as an Exhibit to the Companys Current Report on Form 8-K
dated March 5, 2013 with portions omitted pursuant to the Registrant's
request for confidential treatment and filed separately with the
Securities and Exchange Commission, and incorporated herein by
reference.

10.57

License Agreement effective as of
August 6, 2012 between Advnanotech LLC and Research Frontiers
Incorporated. Previously filed as an Exhibit to the Companys Current
Report on Form 8-K dated March 12, 2013 with portions omitted pursuant to
the Registrant's request for confidential treatment and filed separately
with the Securities and Exchange Commission, and incorporated herein by
reference.

14

Code of Ethics of Research
Frontiers Incorporated. Previously filed as an Exhibit to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2003,
and incorporated herein by reference.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

RESEARCH FRONTIERS
INCORPORATED

(Registrant)

/s/ Joseph M.
Harary

Joseph M. Harary, President and CEO

(Principal Executive Officer)

/s/ Seth L. Van
Voorhees

Seth L. Van Voorhees, Vice President, CFO and
Treasurer

(Principal Financial and Accounting
Officer)

Dated: March 10, 2014

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:

Signature

Position

Date

/s/Darryl
Daigle

Director

March 10, 2014

Darryl Daigle

/s/Gregory G.
Grimes

Director

March 10, 2014

Gregory G. Grimes

/s/Joseph M. Harary

Director, President, CEO

March 10, 2014

Joseph M. Harary

/s/ Alexander
Kaganowicz

Director

March 10, 2014

Alexander Kaganowicz

/s/Robert L.
Saxe

Director, Chairman

March 10, 2014

Robert L. Saxe

/s/Seth L. Van Voorhees

Vice President, CFO, Treasurer

March 10, 2014

Seth L. Van Voorhees

52

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of
DirectorsResearch Frontiers
IncorporatedWoodbury, New York

We have audited the accompanying
consolidated balance sheets of Research Frontiers Incorporated as of December
31, 2013 and 2012 and the related consolidated statements of operations,
shareholders equity and cash flows for each of the three years in the period
ended December 31, 2013. In connection with our audits of the consolidated
financial statements, we have also audited the schedule as listed in the
accompanying index. These consolidated financial statements and schedule are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
financial statements and schedule. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects,
the financial position of Research Frontiers Incorporated at December 31, 2013
and 2012, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2013, in conformity with accounting
principles generally accepted in the United States of America.

Also, in our opinion, the financial
statement schedule when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), Research Frontiers Incorporateds internal control over financial
reporting as of December 31, 2013, based on criteria established in
Internal Control  Integrated
Framework (1992) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and our report dated
March 10, 2014 expressed an unqualified opinion thereon.

Research
Frontiers Incorporated (Research Frontiers or the Company) operates in a
single business segment which is engaged in the development and marketing of
technology and devices to control the flow of light. Such devices, often
referred to as "light valves" or suspended particle devices (SPDs), use
colloidal particles that are either incorporated within a liquid suspension or a
film, which is usually enclosed between two sheets of glass or plastic having
transparent, electrically conductive coatings on the facing surfaces thereof. At
least one of the two sheets is transparent. SPD technology, made possible by a
flexible light-control film invented by Research Frontiers, allows the user to
instantly and precisely control the shading of glass/plastic manually or
automatically. SPD technology has numerous product applications, including:
SPD-Smart windows, sunshades, skylights and interior partitions for homes and
buildings; automotive windows, sunroofs, sun-visors, sunshades, rear-view
mirrors, instrument panels and navigation systems; aircraft windows; eyewear
products; and flat panel displays for electronic products. SPD-Smart light
control film is now being developed for, or used in, architectural, automotive,
marine, aerospace and appliance applications.

The Company has historically utilized its cash, cash equivalents,
short-term investments, and the proceeds from the sale of its investments to
fund its research and development of SPD light valves, for marketing
initiatives, and for other working capital purposes. The Companys working
capital and capital requirements depend upon numerous factors, including the
results of research and development activities, competitive and technological
developments, the timing and cost of patent filings, and the development of new
licensees and changes in the Companys relationships with its existing
licensees. The degree of dependence of the Companys working capital
requirements on each of the foregoing factors cannot be quantified; increased
research and development activities and related costs would increase such
requirements; the addition of new licensees may provide additional working
capital or working capital requirements, and changes in relationships with
existing licensees would have a favorable or negative impact depending upon the
nature of such changes. There can be no assurance that expenditures will not
exceed the anticipated amounts or that additional financing, if required, will
be available when needed or, if available, that its terms will be favorable or
acceptable to the Company. Eventual success of the Company and generation of
positive cash flow will be dependent upon the commercialization of products
using the Companys technology by the Companys licensees and payments of
continuing royalties on account thereof. To date, the Company has not generated
sufficient revenue from its licensees to fund its operations.

(2) Summary of Significant Accounting Policies

(a)Cash
and Cash Equivalents

The Company considers securities purchased with original maturities of
three months or less to be cash equivalents. Cash equivalents consist of
short-term investments in money market accounts at December 31, 2013 and 2012.

Cash and cash equivalents are maintained at financial institutions and,
at times, balances may exceed federally insured limits. We have never
experienced any losses related to these balances. All of our non-interest
bearing cash balances were fully insured at December 31, 2012 due to a temporary
federal program in effect from December 31, 2010 through December 31, 2012.
Under the program, there is no limit to the amount of insurance for eligible
non-interest bearing accounts. Beginning 2013, insurance coverage reverted back
to $250,000 per depositor at each financial institution, and our non-interest
bearing cash balances may again exceed federally insured limits. Amounts on
deposit in excess of federally insured limits at December 31, 2013 is
approximately $5.6 million.

F-6

(b)Short-term Investments

The Company classifies investments in marketable securities as trading,
available-for-sale or held-to-maturity at the time of purchase and periodically
re-evaluates such classifications. Trading securities are carried at fair value,
with unrealized holding gains and losses included in earnings. Held-to-maturity
securities are recorded at cost and are adjusted for the amortization or
accretion of premiums or discounts over the life of the related security.
Unrealized holding gains and losses on available-for-sale securities are
excluded from earnings and are reported as a separate component of accumulated
other comprehensive income (loss) until realized. In determining realized gains
and losses, the cost of securities sold is based on the specific identification
method. Interest and dividends on the investments are accrued at the balance
sheet date. At December 31, 2013 and 2012 all investments were classified as
held to maturity and consisted of the following:

December 31, 2013

December 31, 2012

Certificates of Deposit

Maturity

Value of Held to Maturity

Value of Held to Maturity

Investment

Date

Investments (based on
cost)

Investments (based on
cost)

$

2,011,967

10/16/14

$

2,011,967

$

2,000,000

$

2,007,997

10/16/14

$

2,007,997

$

2,000,000

$

502,821

06/29/14

$

502,821

$

500,940

$

301,692

04/06/14

$

301,692

$

300,564

$

252,453

03/29/14

$

252,450

$

251,417

$

5,076,927

$

5,052,921

(c) Royalties
Receivable

Royalties
receivable are recorded at the amounts specified within the license agreements
when the collectability of the receivable is reasonably assured. The receivables
do not bear interest. The allowance for doubtful accounts is the Companys best
estimate of the amount of probable credit losses in the Companys existing
royalties receivable. The Company determines the allowance based on historical
write off experience. The Company reviews its allowance for doubtful accounts
periodically. Past due accounts are reviewed individually for collectability.
Account balances are charged off against the allowance after all means of
collection have been exhausted and the potential for recovery is considered
remote.

(d) Fixed Assets

Fixed assets are carried at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets.

(e) Revenue Recognition/Fee
Income

The Company has entered into a number of license agreements covering its
light control technology. The Company receives minimum annual royalties under
certain license agreements and records fee income on a ratable basis each
quarter. In instances when sales of licensed products by its licensees exceed
minimum annual royalties, the Company recognizes fee income as the amounts have
been earned. Certain of the fees are accrued by, or paid to, the Company in
advance of the period in which they are earned resulting in deferred revenue.
Such excess amounts are recorded as deferred revenue and recognized into income
in future periods as earned.

F-7

Fee income
represents amounts earned by the Company under various license and other
agreements (note 7) relating to technology developed by the Company. During 2013
five licensees accounted for 40%, 12%, 6% and 6%, and 5% respectively of fee
income recognized for the year. During 2012, four licensees accounted for 62%,
6%, 5% and 5% respectively of fee income recognized during the year.

(f) Basic and Diluted Loss Per Common
Share

Basic earnings (loss) per share excludes any dilution. It is based upon
the weighted average number of common shares outstanding during the period.
Dilutive earnings (loss) per share reflects the potential dilution that would
occur if securities or other contracts to issue common stock were exercised or
converted into common stock. The Companys dilutive loss per share equals basic
loss per share for each of the years in the three-year period ended December 31,
2013 because all common stock equivalents (i.e., options and warrants) were
antidilutive in those periods. The number of options and warrants that were not
included because their effect is antidilutive was 2,860,219, 2,630,002 and
1,973,906, for 2013, 2012, and 2011, respectively.

(g) Research and Development
Costs

Research and development costs are charged to expense as incurred.

(h) Patent Costs

The Company expenses costs relating to the development or acquisition of
patents due to the uncertainty of the recoverability of these items.

(i) Use of Estimates

The preparation of the Companys consolidated financial statements
requires management of the Company to make a number of estimates and assumptions
relating to the reported amount of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during this period.
Actual results could differ from those estimates.

(j) Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

F-8

In accordance
with ASC Topic 740 (FIN 48), we recognize tax benefits only for tax positions
that are more likely than not to be sustained upon examination by tax
authorities. The amount recognized is measured as the largest amount of benefit
that is greater than 50 percent likely to be realized upon ultimate settlement.
Unrecognized tax benefits are tax benefits claimed in tax returns that do not
meet these recognition and measurement standards. We classify accrued interest
and penalties related to any unrecognized tax benefits in our income tax
provision. At December 31, 2013 and 2012, we do not have accrued interest and
penalties related to any unrecognized tax benefits. We do not believe we have
any uncertain tax positions as of December 31, 2013 and 2012.

The tax years subject to examination by major tax jurisdictions include
the years 2009 and forward by the U.S. Internal Revenue Service and certain
states. The Company is not currently being audited by any tax jurisdiction.

(k) Fair Value of Financial
Instruments

The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The carrying amounts of all financial instruments classified as a current asset
or current liability are deemed to approximate fair value because of the short
maturity of those instruments.

(l) Equity-Based
Compensation

We recognize all stock-based compensation as an expense in the financial
statements and such costs are measured at the fair value of the award at the
date of grant. In addition to reflecting compensation expense for new
share-based payment awards, expense is also recognized to reflect the remaining
vesting period of awards that had been granted in prior periods. Tax benefits
related to stock option exercises are reflected as financing cash inflows
instead of operating cash inflows.

The exercise price for stock options granted are generally set at the
average for the high and low trading prices of the Companys common stock on the
trading date immediately prior to the date of grant, and the related number of
shares granted are fixed at the date of grant.

In order to determine the fair value of stock options and warrants on the date of
grant, the Company uses the Black-Scholes option-pricing model. Inherent in this
model are assumptions related to expected stock-price volatility, option term,
risk-free interest rate and dividend yield. While the risk-free interest rate
and dividend yield are less subjective assumptions that are based on factual
data derived from public sources, the expected stock-price volatility and option
term assumptions require a greater level of judgment.

In connection with the employee stock options and restricted stock
grants, the Company charged $2,545,060, $873,888, and $719,811 to operations
during the years ended December 31, 2013, 2012, and 2011, respectively. In lieu
of higher cash compensation, the Company has granted warrants and non-employee
options to consultants. These warrants and non-employee options vest ratably
over various terms ranging from 24 to 59 months. Non-employee options covering
60,000 shares were granted to consultants during 2012. These non-employee
options, as well as previously granted warrants, were valued at fair value at the time that the related services are
provided using the Black Scholes method and marked to market quarterly using the
Black Scholes method. The Company incurred a charge (benefit) to operations of
$174,320, $4,690, and ($16,974) for 2013, 2012, and 2011, respectively in
connection with these warrants and non-employee options.

F-9

(m) Restricted
Stock

Compensation cost for restricted stock is measured using the quoted
market price of the Company's common stock at the date the common stock is
granted. The compensation cost is recognized over the period between the issue
date and the date any restrictions lapse. Restricted stock is included in total
common shares outstanding upon the lapse of any restrictions.

(n) Impairment of Long-Lived
Assets

The Company reviews long-lived assets to determine whether an event or
change in circumstances indicates the carrying value of the asset may not be
recoverable. The Company bases its evaluation on such impairment indicators as
the nature of the assets, the future economic benefit of the assets and any
historical or future profitability measurements, as well as other external
market conditions or factors that may be present.

ASC Topic 820 defines fair value as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. ASC Topic 820 establishes a fair
value hierarchy that distinguishes between (1) market participant assumptions
developed based on market data obtained from independent sources (observable
inputs) and (2) an entitys own assumptions about market participant assumptions
developed based on the best information available in the circumstances
(unobservable inputs).

We value financial instruments using a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value. These tiers include:
Level 1, defined as observable inputs such as quoted prices in active markets
for identical assets or liabilities; Level 2, defined as inputs other than
quoted prices for similar assets or liabilities in active markets that are
either directly or indirectly observable; and Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity
to develop its own assumptions.

Financial assets accounted for at fair value on a recurring basis at
December 31, 2013 and 2012, include cash and cash equivalents of approximately
$5.9 million and $8.4 million, respectively, as well as short term investments
of $5.1 million and $5.1 million in 2013 and 2012, respectively. The carrying
value of these assets approximates fair value due to the short-term maturity of
these instruments.

F-10

(p)
Recent Accounting
Pronouncements

New Accounting Standards

New accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standards setting bodies that we adopt according to the various timetables the FASB specifies. The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Companys results of operations, financial position or cash flow.

(3) Fixed Assets

Fixed assets and their estimated useful lives as of December 31, 2013 and
2012 are as follows:

2013

2012

Estimated useful
life

Equipment and furniture

$

1,351,877

$

1,301,341

5 years

Life of lease or estimated

Leasehold Improvements

437,745

437,745

life of asset if shorter

1,789,622

1,739,086

Less accumulated depreciation

and amortization

(1,725,257

)

(1,680,045

)

$

64,365

$

59,041

The Company incurred depreciation expense of $45,212, $34,963 and $39,857 for 2013, 2012, and 2011, respectively in connection with these fixed assets.

F-11

(4) Accrued Expenses and Other

Accrued expenses consist of the following at December 31, 2013 and 2012:

2013

2012

Payroll, bonuses and related benefits

$

75,966

$

110,621

Professional
services

4,400

23,450

Deferred rent

--

10,691

Other

359

361

$

80,725

$

145,123

(5) Income Taxes

Since
inception, the Company has incurred losses from operations and as a result has
not recorded income tax expense. Benefits related to net operating loss
carryforwards and deferred items have been fully reserved since it was not more
likely than not that the Company would achieve profitable operations.

The Company applied for state research and development refundable credits
for the years ended December 31, 2006 through 2009. In April 2012, the Company
received $613,397 relating to these credits for the years 2006 through 2009,
which is reflected as an income tax benefit in the accompanying statement of
operations for the year ended December 31, 2012. The Company currently does not expect to collect additional credits
for years subsequent to 2009. In addition, $61,340 is included in operating
expenses on the accompanying statement of operations for the year ended December
31, 2012 relating to professional fees paid in connection with securing these
refundable credits.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 2013 and 2012 are presented
below.

2013

2012

Deferred tax assets:

Depreciation

$

104,000

$

95,000

Allowance for bad
debts

70,000

37,000

Net operating loss
carryforwards

23,116,000

22,516,000

Stock option expense

1,347,000

1,051,000

Research and other
credits

972,000

977,000

Other temporary
differences

15,000

15,000

Total gross deferred tax assets

25,624,000

24,700,000

Less valuation
allowance

(25,624,000

)

(24,700,000

)

$

--

$

--

In assessing the realizability of deferred tax assets, the Company
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon future taxable income during the period in which
those temporary differences become deductible. The Company considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon its historical
operating losses, utilization of deferred tax assets cannot currently be
determined. Accordingly, the Company has recorded a full valuation allowance
against the deferred tax assets, as they will not be realized until the Company
achieves profitable operations in the future.

At December 31, 2013, the Company had a net operating loss carryforward
for federal income tax purposes of approximately $58,000,000, varying amounts of
which will expire in each year from 2014 through 2033. Research and other credit
carryforwards of approximately $972,000are available to the Company to reduce income
taxes payable in future years principally through 2033. Net operating loss
carryforwards of approximately $3,227,000 and research and other credit
carryforwards of approximately $84,000 are scheduled to expire during fiscal
2014, if not utilized.

F-12

(6) Shareholders Equity

(a)Common
Stock and Warrants

During 2013, the Company received proceeds of $822,969 in connection with
the exercise of options and warrants representing 179,983 shares of common
stock.

During 2012 the Company sold, pursuant to the Companys effective
registration statement filed with the SEC, equity in the Company as follows:

Date

Shares issued

Warrants issued

Unit price

Proceeds

July 30, 2012

589,227

117,846

$

2.97

$

1,745,549

*

August 28,
2012

1,900,000

380,000

$

2.97

$

5,229,201

**

October 3, 2012

1,250,000

250,000

$

4.49

$

5,275,750

***

Total

3,739,227

747,846

$

12,250,500

____________________

(*)

Net of fees of
$4,455

(**)

Net of fees of
$413,719

(***)

Net of fees of
$336,750

Shares and warrants issued in the July 30, 2012 and August 28, 2012 sales
were sold pursuant to the Companys currently effective shelf registration.
Warrants issued in the July 30, 2012 and August 28, 2012 sales are exercisable
for a period of five years beginning on the closing date of the offering at an
exercise price of $4.45 per share (150% of the aggregate offering price for a
share of common stock and corresponding warrant).

The warrants issued in connection with the October 3, 2012 sale are
exercisable for a period of five years beginning on the six-month anniversary of
the closing date at an exercise price of $6.73 per share (approximately 150% of
the aggregate offering price). The securities issued in the October 3, 2012 sale
were not registered under the Securities Act of 1933, as amended, or any state
securities laws, and were issued and sold in a private placement pursuant to
Regulation D of the Securities Act. The Company subsequently filed a Form S-3
registration with the US Securities and Exchange Commission which was declared
effective on December 26, 2012 that covers the resale of the shares by the
purchaser and the shares issuable upon exercise of the warrants.

(b) Options and
Warrants

(i) Employee Options

In 2008, the shareholders approved the Companys 2008 Equity Incentive
Plan which provides for the granting of both incentive stock options at the fair
market value at the date of grant and nonqualified stock options at the fair
market value at the date of grant to employees or non-employees who, in the
determination of the Board of Directors, have made or may make significant
contributions to the Company in the future. The Company may also award stock
appreciation rights, restricted stock, or restricted stock units under this
plan. The Company initially reserved 750,000 shares of its common stock for
issuance under this plan, and 611,692 options and other awards were available
for issuance under this plan as of December 31, 2013.

F-13

At the
discretion of the Board of Directors, options expire in ten years or less from
the date of grant and are generally fully exercisable upon grant but in some
cases may be subject to vesting in the future. Full payment of the exercise
price may be made in cash or in shares of common stock valued at the fair market
value thereof on the date of exercise, or by agreeing with the Company to cancel
a portion of the exercised options.

The Company granted no employee options during 2012 and 2011. The Company
granted 499,700 fully vested options during 2013 and recorded share-based
compensation of $1,431,620. The Company valued these 2013 grants using the
Black-Scholes option pricing model with the following weighted average
assumptions:

Fair value on grant date

$

2.86

Expected
dividend yield

--

Expected volatility

64

%

Risk free
interest rate

1.62

%

Expected term of the option

5 years

Activity in stock options is summarized
below:

Weighted

Weighted

Average

Number of

Average

Remaining

Aggregate

Subject to

Exercise

Contractual

Intrinsic

Option

Price

Term (Years)

Value

Balance at January 1, 2011

1,734,199

$

11.64

4.3

$

281,600

Granted

-

$

20.43

Cancelled

(379,550

)

$

3.72

Exercised

(85,000

)

$

9.48

Balance at December 31, 2011

1,269,649

$

11.64

4.2

$

-

Granted

(151,750

)

$

12.76

Cancelled

-

$

-

Exercised

-

$

-

Balance at December 31, 2012

1,117,899

$

9.03

3.7

$

4,250

Granted

499,700

$

5.26

Cancelled

(64,500

)

$

12.81

Exercised

(72,500

)

$

4.83

Balance at December 31, 2013

1,480,599

$

7.80

5.2

$

399,000

All options are exercisable at December
31, 2013.

F-14

During 2011 an employee was to make a
payment of $276,750 for exercising 75,000 options but instead he forfeited
29,270 options which would have been exercisable at a fair market value of
$276,896 and delivered the difference in cash.

During 2013 and 2011, the Company
received $322,475 and $39,744, respectively in net proceeds from the exercise of
options.

(ii) Warrants and Non-Employee Options

Activity in
warrants is summarized below:

Number of Shares Underlying

Warrants and Non-Employee

Weighted Average

Options Granted

Exercise Price

Balance at
January 1, 2011

708,909

$

5.00 - 9.00

Exercised

(4,652

)

5.64

Terminated

-

-

Issued

-

-

Balance at
December 31, 2011

704,257

$

5.00 - 9.00

Exercised

-

-

Terminated

-

-

Issued

807,846

5.12

Balance at
December 31, 2012

1,512,103

$

5.56

Exercised

(107,483

)

4.45

Terminated

(25,000

)

9.00

Issued

-

-

Balance at
December 31, 2013

1,379,620

$

5.58

Warrants and non-employee options
generally expire from five to ten years from the date of issuance. At December
31, 2013, the number of warrants exercisable was 1,365,870 at a weighted average
exercise price of $5.60 per share.

The Company granted a total of 60,000
non-employee options to two consultants during 2012 at a weighted average
exercise price of $3.95. These grants vest ratably over 24 months from the date
of grant. These non-employee options and previously granted warrants were valued at fair value at the time that
the related services are provided using the Black-Scholes method and marked to
market quarterly using the Black Scholes method. The Company incurred a charge
(benefit) of $174,320 $4,690 and ($16,974), for 2013, 2012, and 2011,
respectively in connection with these non-employee options.

F-15

During 2013 and 2011, the Company received $472,819 and $26,233 in net
proceeds from the exercise of warrants.

(c) Restricted Stock
Grants

During 2013, the Company granted 282,900 shares of restricted stock to its directors and employees. Directors received 91,500 of these shares of restricted common stock. All the shares granted to the directors, as well as 3,400 shares granted to employees vested immediately upon grant. The remaining 188,000 shares vest ratably over the 36 months following grant. The market value per share on the date of grant was $3.70.

During, 2012 the Company granted 363,200 shares of common stock to its directors and employees. All of the 96,500 shares granted to the directors, as well as 5,100 shares granted to employees, vested immediately upon grant. The remaining 261,600 shares issued to employees vest ratably over 36 months following grant. The market value per share on the date of grant was $3.38.

During 2011, the Company granted 63,000 and 139,000 shares of common stock to directors and employees respectively. The market price of each share on the date of grant was $5.20. All of the shares granted to the directors, as well as 3,000 shares granted to certain employees, vested immediately upon grant. The remaining 136,000 shares issued vest ratably over the next 36 months.

In connection with these grants, as well as prior grants that are not yet fully vested, the Company charged $2,545,060, $873,888 and $719,811 to operations during 2013, 2012 and 2011 respectively.

At December 31, 2013, 2012 and 2011, 611,692, 218,733 and 90,667 respectively, of these grants remain unvested. In addition, at December 31, 2013, $758,000 remains to be charged to operations over the next 24 months relating to these grants.

(7) License and Other Agreements

The Company has entered into a number of license agreements covering
various products using the Companys SPD technology. Some of these license
agreements are limited to specific countries and/or markets. Licensees of
Research Frontiers who incorporate SPD technology into end products pay Research
Frontiers an earned royalty of 5-15% of net sales of licensed products under
license agreements currently in effect, and may also be required to pay Research
Frontiers fees and minimum annual royalties. Licensees who sell products or
components to other licensees of Research Frontiers do not pay a royalty on such
sale; Research Frontiers will collect such royalty from the licensee
incorporating such products or components into its own end-products. Research
Frontiers license agreements typically allow the licensee to terminate the
license after some period of time, and give Research Frontiers only limited
rights to terminate before the license expires. Most licenses are non-exclusive
and generally last as long as our patents remain in effect.

(8) Commitments

The Company has an employment agreement with three of its officers which
provides for an annual base salary of $450,000, $402,000 and $220,000
respectively for calendar year 2014. Each of these employment agreements have an
evergreen provision that extend the term by one year on the anniversary date
unless either the Company or the employee has given notice that they will not be
renewing the agreement upon the expiration of its term.

The Company has a defined contribution profit sharing (401K) plan
covering employees who have completed one year of service. Contributions are
made at the discretion of the Company. The Company did not make any
contributions to this plan for 2013, 2012, or 2011.

F-16

The Company
occupies premises under an operating lease agreement which expires on March 31,
2014. During February 2014, the Company entered into a new lease expiring on
March 31, 2025. As of December 31, 2013, the approximate minimum annual future
rental commitments under the expiring and new lease agreements for the next five
years are as follows:

2014:

$

163,000

2015:

$

168,000

2016:

$

174,000

2017:

$

180,000

2018:

$

186,000

Thereafter:

$

1,294,000

Rent expense, including other occupancy related expenses, amounted to
approximately $187,000, $200,000, and $172,000, for 2013, 2012, and 2011,
respectively.

(9) Rights Plan

In February 2013, the Companys Board of Directors adopted a Stockholders Rights Plan (the Rights Plan) and declared a dividend distribution of one right (a Right) for each outstanding share of Company common stock to stockholders of record at the close of business on March 3, 2003 (Record Time) and authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time and prior to the Separation Time.

Separation Time shall mean the earlier of the Close of Business on the tenth Business Day (or such later date as the Board of Directors may from time to time fix by resolution adopted prior to the Separation Time that otherwise would have occurred) following but not including (i) the date on which any Person commences a tender or exchange offer that, if consummated, would result in such Persons becoming an Acquiring Person, and (ii) the date of the first event causing a Flip-in Date to occur; provided that if any tender or exchange offer referred to in clause (i) of this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made.

Subject to certain exceptions listed in the Rights Plan, if a person or group has acquired beneficial ownership of, or commences a tender or exchange offer for, 15% or more of the Companys common stock, unless redeemed by the Companys Board of Directors, each Right entitles the holder (other than the acquiring person) to purchase from the Company $80 worth of common stock for $40. If the Company is merged into, or 50% or more of its assets or earning power is sold to, the acquiring company, the Rights will also enable the holder (other than the acquiring person) to purchase $80 worth of common stock of the acquiring company for $40. The Rights will expire at the close of business on February 11, 2023, unless the Rights Plan is extended by the Companys Board of Directors or unless the Rights are earlier redeemed by the Company at a price of $.0001 per Right. The Rights are not exercisable during the time when they are redeemable by the Company.

The above description highlights some of the features of the Companys Rights Plan and is not a complete description of the Rights Plan. A more detailed description and copy of the Rights Plan has been filed with the SEC and is available from the Company upon request.

F-17

(10) Selected Quarterly Financial Data
(Unaudited)

Quarter

2013

Fee
Income

$

707,231

$

521,844

$

506,692

$

425,592

Operating loss (2)

(1,597,036

)

(790,636

)

(869,483

)

(2,626,080

)

Net
loss (2)

(1,589,184

)

(779,480

)

(859,954

)

(2,616,469

)

Basic and diluted net loss

per common share (1)

(0.07

)

(0.03

)

(0.04

)

(0.11

)

Quarter

2012

First

Second

Third

Fourth

Fee
income

$

482,578

$

450,828

$

471,886

$

552,044

Operating loss (2)

(1,434,553

)

(793,041

)

(869,788

)

(612,787

)

Net loss
(2)

(803,339

)

(789,551

)

(866,464

)

(604,247

)

Basic and diluted net loss

per common share (1)

(0.04

)

(0.04

)

(0.04

)

(0.03

)

____________________

(1) Since per
share information is computed independently for each quarter and the full year,
based on the respective average number of common shares outstanding, the sum of
the quarterly per share amounts does not necessarily equal the per share amounts
for the year.

(2) The Company incurred higher costs in the first and fourth quarter of
2013 and the first quarter of 2012 relating primarily to: (i) $1,841,000 and
$424,000 of stock and option compensation charges in the 2013 and 2012,
respectively, relating to common stock and options granted to directors,
employees and consultants, and (ii) $175,000 in the first quarter of 2013 and
2012, respectively, in directors fees.

F-18

SCHEDULE II

RESEARCH FRONTIERS INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 2013, 2012,
and 2011

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